SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended June 30, 1995
Commission File Number 0-8401
-----------------------------
CACI International Inc
----------------------
(Exact name of Registrant as
specified in its charter)
Delaware
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(State or other jurisdiction of
incorporation or organization)
54-1345888
----------
(I.R.S. Employer Identification No.)
1100 North Glebe Road, Arlington, VA 22201
------------------------------------------
(Address of principal executive offices)
(703) 841-7800
--------------
(Registrant's telephone number,
including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
- ------------------- -----------------------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
CACI International Inc Common Stock, $0.10 par value
----------------------------------------------------
(Title of each class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
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Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X . No .
----- -----
The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of August 31, 1995, was approximately $87,166,344.
Indicate the number of shares outstanding of each of the Registrant's classes
of Common Stock, as of August 31, 1995: CACI International Inc Common Stock,
$.10 par value, 10,086,996 shares.
Documents Incorporated by Reference
(1) The information relating to directors and officers contained in the proxy
statement of the Registrant to be filed in connection with its 1995 Annual
Meeting of Shareholders is incorporated by reference into Part III, Items 10,
11, 12, and 13 of this Form 10-K.
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CACI INTERNATIONAL INC AND SUBSIDIARIES
Table of Contents to Annual Report on
Form 10-K for the Fiscal Year Ended June 30, 1995
PART I
Item 1. Business
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Item 8. Financial Statements and Supplementary Data
Item 9. Disagreements on Accounting and Financial Disclosure
PART III
Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and
Management
Item 13. Certain Relationships and Related Transactions
PART IV
Item 14. Exhibits, Financial Statements, Schedules and
Reports on Form 8-K
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BUSINESS INFORMATION
Unless the context indicates otherwise, the terms "the Company" and "CACI" as
used in Section I, include both CACI International Inc and its wholly-owned
subsidiaries. The term "the Registrant", as used in Section I, refers to CACI
International Inc only.
PART I
Item 1. BUSINESS
BACKGROUND
CACI International Inc (the "Registrant") was organized as a Delaware
corporation under the name of "CACI WORLDWIDE, INC." on October 8, 1985. By a
merger effected on June 2, 1986, the Registrant became the parent of CACI,
Inc., a Delaware corporation, and CACI N.V., a Netherlands corporation.
The Registrant is a holding company and its operations are conducted through
wholly-owned subsidiaries which are located in the United States and Europe.
OVERVIEW
CACI is strategically positioned in the information technology ("IT")
industry. With 1995 revenue of over $232 million, CACI serves clients in
major segments of government and commercial markets throughout North America
and Western Europe. Many of the Company's client relationships have existed
for five years or more.
Founded in 1962, CACI provides computer-based information technology,
products, and services. The Company's distinctive solutions include
enterprise process redesign; systems engineering; software reuse and
development; litigation support services; electronic commerce; system
integration; simulation; market analysis; and imaging and document support.
The Company manufactures no equipment.
CACI's service and value has enabled the Company to sustain high rates of
repeat business and continuing client support. The Company believes that its
performance similarly enables it to compete effectively for new clients and
new contracts. The Company is organized to seek competitive business
opportunities and has designed its operations to support major programs.
CACI's primary markets -- both domestic and international -- are agencies of
national governments, major corporations, state and local governments, and
other business organizations. The client market for CACI's information
systems and high technology services is created by the need for solutions to
the complex systems and information environment in which the clients operate,
be it governmentally mandated programs or competitively driven needs in the
commercial arena.
CACI has structured its new business development organization to respond to
the globally competitive marketplace. The Company employs full-time
marketing, sales, and proposal development specialists who support Company
line operations' marketing and sales responsibilities.
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The Company has continued to expand its portfolio of proprietary software and
database products. The Company offers marketing systems software and database
products, targeted to clients who need systems and analysis for retail sales
of consumer products, direct mail campaigns, franchise or branch site location
projects, and similar requirements. In CACI's simulation technology business,
the Company offers both computer-based simulation languages and derivative
simulation products that enable clients to visualize the impact of proposed
changes or new technologies before implementation. The broad selection of
simulation products includes solutions for the manufacturing industry; for
wide area communications networks (e.g., WANs, satellites, land lines); for
local area computer networks (i.e., LANs); for the study of business
processes; and for design of distributed computer systems architectures.
CACI's REenterprise [REenterprise is a service mark of CACI, Inc.-FEDERAL]
business process reengineering services combines technology tasks and
methodologies to plan, integrate, and manage technology change - without
losing existing investments in technology.
CACI is one of the dominant providers of electronic commerce ("EC") solutions
to the Federal Government. The complete suite of EC products is available on
GSA schedules and provides a flexible but fully-featured configuration to
enable easy management of purchases and contracts.
As probably the world's largest provider of litigation support services, CACI
customizes these services to the unique needs of both government and corporate
clients.
CACI's product data management ("PDM") is the "de facto" standard in the
Federal Government and is now in broad commercial use internationally. The
PDM system enables clients to standardize and improve the way they manage the
life cycle of systems, products, and material assets, resulting in cost
savings and increased productivity.
The Company operates through wholly-owned subsidiaries established to serve
specific market segments or conduct business in specific geopolitical
jurisdictions.
CACI's major operating subsidiary in Europe, CACI Limited, is headquartered in
London, England, and operates primarily in support of CACI information
systems, marketing systems, and simulation technology lines of business in the
United Kingdom and Western Europe.
CACI's American Legal Systems Corp. ("ALS") subsidiary specializes in
providing legal systems and litigation support services to law firms and major
corporations in the United States, and complements the Company's other legal
systems and litigation support business with government clients.
At June 30, 1995, CACI employed approximately 3,100 people. This total
includes 410 part-time employees. The corporation currently operates from its
headquarters at Three Ballston Plaza, 1100 N. Glebe Road, Arlington, Virginia.
CACI also has operating offices and facilities in 49 additional locations
throughout the United States, Europe, and Canada.
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GENERAL DESCRIPTION OF CACI SYSTEMS, TECHNOLOGIES, AND PRODUCTS
Representative systems applications include:
. Airport and airspace traffic planning
. Ammunition management information systems
. Automated document and records management systems
. Automated procurement
. Business support systems
. Computer aided logistics/data information systems
. Electronic commerce and enterprise process redesign
. Executive decision support systems
. Imaging services
. Information management systems
. Legal systems and litigation support services
. Manufacturing requirements planning systems
. Marketing and customer database management systems
. Product data management
. Retail market modeling
. Simulation languages and derivative products
. Site location planning and analysis systems
. Software development and reuse
. Systems reengineering
. Systems integration
. State motor vehicle registration and related management information system
. Weapon systems/equipment configuration management systems
CACI products are installed in over 10,000 locations worldwide, and many are
designed to run on a variety of commercially available computers.
Representative CACI software and marketing systems include:
Simulation Technology:
SIMFACTORY II.5 General Factory Simulation Software. A software product for
factory planners to study alternative plant and equipment configurations.
[SIMFACTORY II.5 is a registered trademark of CACI Products Company.]
COMNET II.5 Data Communication Network Simulation Software. A software
product for communications engineers to study wide area networks of
satellites, land lines, switching systems, and protocols. [COMNET II.5 is a
registered trademark of CACI Products Company.]
COMNET III Data Communication Network Simulation Software. An object-
oriented (non-programming) software product for the prediction of local and
wide area network performance. [COMNET III is a trademark of CACI Products
Company.]
NETWORK II.5 Computer Architecture Simulation Software. A software product
for engineers to study alternative combinations of computers and data storage
devices. [NETWORK II.5 is a registered trademark of CACI Products Company.]
SIMSCRIPT II.5 Simulation Programming Language. A language designed
especially for analysts to build computer-based representations ("models") of
complex activities, e.g., airways and airport traffic; maintenance procedures
for fleets of ships; warfare studies of military equipment and tactics; and
communications networks. [SIMSCRIPT II.5 is a registered trademark of CACI
Products Company.]
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SIMPROCESS III Analytical Simulation Software. An electronic prototyping
tool for business process reengineering that enables managers to model a
current business process, then explore alternative approaches before
implementation. [SIMPROCESS is a registered trademark of CACI Products
Company.]
MODSIM II Simulation Programming Language. A computer programming and
graphics environment that provides an object-oriented approach to structuring
software. This approach provides an intuitive development framework to
programmers, one that allows code to be reused. [MODSIM II is a registered
trademark of CACI Products Company.]
MODSIM III Simulation Programming Language. A graphical computer
programming and simulation environment that generates C++ code. [MODSIM III
is a trademark of CACI Products Company.]
SIMOBJECT Object Oriented Software. A software framework for the reduction
of time and cost in building simulation models. [SIMOBJECT is a registered
trademark of CACI Products Company.]
REenterprise Business Process Reengineering Services. Services combining
proprietary methodologies and computer software to analyze and reconfigure an
organization's business process. [REenterprise is a service mark of CACI,
Inc.-Federal.]
Marketing Systems Technology and Data and Information Systems Products:
InSite-USA (also InSite, UK version) Marketing and Demographic Information
System. A PC-based geographic information system combining software, data, and
mapping capabilities to enable planners to determine the location of retail
outlets, branch networks, sales territories, potential customers, and
competitors. [InSite-USA and InSite are trademarks of CACI, Inc.-Federal and
CACI Limited, respectively.]
ACORN (A Classification of Residential Neighborhoods) Demographic
Information Services. A tool that analyzes consumers according to the type of
residential area in which they live, used to identify the prime prospects for
all types of consumer goods and services. [ACORN is a registered trademark of
CACI, Inc.-Federal in the United States; and also a registered service mark
of CACI, Inc.-Federal and CACI Limited in the United States, and in the United
Kingdom and Northern Ireland, repsectively.]
MARKET*MASTER Demographic Information System. A database marketing system
that enables companies to analyze their customer files by product holding and
usage for the purpose of cross-selling other products and services.
[MARKET*MASTER is a trademark of CACI, Inc.-Federal.]
SITE Demographic Information Software and Reports. A detailed demographic
and applied market research database for any geographic area, such as county,
zip code, TV broadcast area, congressional district, or retail trade area.
[SITE is a registered trademark of CACI Limited.]
Prophecy Financial Accounting Software. A financial accounting and business
software product distributed by CACI in the United Kingdom under license from
CSP Australia. [Prophecy is a trademark of CSP Australia.]
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Miracle Financial Accounting System. A business software product running on
Data General proprietary systems. [Miracle is a trademark of CACI Limited.]
UpFront Graphical Interface Software. A graphical user interface that
enables software to be used in an object-oriented manner. [UpFront is a
trademark of CACI Limited.]
FEDERAL GOVERNMENT AGENCIES
CACI provides its entire range of information systems, technical services, and
proprietary products to defense and civilian agencies of the U.S. Federal
Government. These activities require CACI's expert knowledge of agency
policies and operations. These assignments most often combine the wide range
of CACI's skills in information systems, systems engineering, logistics
sciences, weapons systems, simulation, and automated document management
systems. CACI also contracts with other national governments.
STATE AND LOCAL GOVERNMENT
CACI is a technological leader in the supply of automated information systems
for state governments' management of vehicle registration, licensing, and
wheeled vehicle revenue support. The Company also offers its broadly based
software and systems integration services to this market segment.
MAJOR CORPORATIONS
CACI's commercial market base consists primarily of large corporations
(nominally characterized as the "Fortune 1000"). This market is a primary
target of CACI's proprietary software and database products in the Company's
marketing systems and simulation technology lines of business.
OTHER SERVICES
The Company operates a language training, translation, and interpretation
services organization in support of the Federal Government.
FOUNDATION OF SUCCESS, CACI PEOPLE
CACI's business success is highly correlated with the Company's ability to
attract, recruit, motivate, and retain exceptional people at all levels of the
organization. The most valuable asset and resource the Company has is its
people. The Company is in continuing competition for the recruitment and
retention of highly skilled professionals.
For these reasons, the Company has endeavored to develop and maintain
competitive salary structures, incentive compensation programs and benefits,
and other individual recognition and award programs to highlight the Company's
intense interest in the success of its people in their careers.
In order to compete effectively in attracting and retaining such personnel,
the Company and its subsidiaries provide substantial benefits to their
employees. These benefits vary among the Company and its subsidiaries, but
generally include paid vacations and holidays, medical and life insurance,
incentive bonuses, and other benefits under pension and stock purchase plans.
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At the same time, the Company has been forced by the current economic climate
to scrutinize and recast several of its compensation and benefit programs to
ensure a competitive balance of compensation, incentives, and benefits for the
costs incurred.
The Company recruits people from various market populations, including
experienced industry professionals, university graduates, trade and technical
school graduates, and seasoned technicians. The Company's professional
profile includes a high percentage of college graduates, many with advanced
degrees, including those at the masters and doctoral levels. The Company
seeks professionals with academically certified credentials in computer-based
information sciences, systems engineering, management systems, market
research, economics, military sciences, law, and other scientific and
research-oriented disciplines.
The Company has structured its promotion and advancement policies to meet the
current competitively driven market environment. Individuals advance in
relation to their abilities to perform as program managers, their demonstrated
exemplary leadership skills in technical endeavors, or their managerial
achievements against specified objectives, quotas, or other defined targets.
CACI advancement criteria incorporate specific requirements to demonstrate a
"client-service orientation" and the need to work synergistically within the
Company, in response to the wide range of client technical and contractual
requirements, or in development of solution approaches to new client projects.
This philosophy is consistent with CACI's current market, and is a catalyst
for individuals to support Company objectives.
The Company also requires all of its employees, consultants, officers, and
directors to subscribe annually to and affirm the Company's published Code of
Ethics and Business Conduct Standards. The Company has published and enforced
policies that set high standards for the conduct of all business with clients,
suppliers, vendors, and the public at large.
MARKETPLACE, DESCRIPTION AND SIGNIFICANT ACTIVITIES
CACI operates in an industry characterized by the presence of many highly
competitive firms. At the same time, CACI enjoys a respected position as one
of the larger public corporations in the segment of the information technology
industry that does not manufacture equipment. Although the Company is a
premier supplier of proprietary computer-based simulation technology products
and services, and is a major supplier of proprietary marketing systems
products and services in both the United States and the United Kingdom, CACI
is not primarily a software product developer-distributor (See discussion
following on Patents, Trademarks, Trade Secrets and Licenses).
Competition for new contracts centers on reputation, responsiveness to
proposal requests, price, and many other factors. Competition for software
products and services centers on reputation, applicability, and quality of
product support and maintenance services, among other elements.
The Company has established a distinctive reputation in combining
comprehensive knowledge of client challenges with the Company's significant
expertise in the design, development, and implementation of advanced
information technology solutions. This industry niche orientation provides
CACI with important opportunities to support large equipment manufacturers
with the systems integration and software services they frequently require to
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compete for multi-million dollar contracts issuing from the U.S. Federal
Government.
CACI has also taken active steps to develop strategic relationships with
industry giants -- such as Microsoft, Sun Microsystems, Loral Corporation,
IBM, DEC, GE Information Systems, Unisys, BDM, PRC Inc., AT&T Global
Information Solutions, Lotus Development Corporation, Oracle, Sybase -- that
have business perspectives and objectives compatible with those of CACI. The
Company intends to continue the active cultivation of these relationships
wherever they support CACI's growth objectives. The Company also seeks to
expand its commercial markets for its information systems business through
these relationships.
Marketing and new business development for the Company is conducted by all the
officers and managers of the Company (the CEO, executive officers, vice
presidents, division and department managers). CACI's proprietary software
and data products are sold by full-time salespeople. The Company has
established several distributor-type sales agreements for the sale of its
products in specified overseas markets. For its information systems and
services markets, the Company employs several marketing professionals who
support the Company's targeting of major contract opportunities, primarily in
the U.S. Federal Government market arena.
CACI faces competition from a substantial number of firms, some of which are
larger in size and financial resources than CACI. The Company obtains much of
its business on the basis of proposals submitted in response to requests for
proposals from potential and current customers, who may also request proposals
for similar services from other firms. Additionally, the Company may face
indirect competition from certain government agencies that perform services
for themselves similar to those marketed by CACI. The Company knows of no
single competitor that is dominant in its fields of technology. The Company
has a relatively small share of the available worldwide market for its
products and services and has a goal of achieving growth through increased
market share.
CACI's sales of proprietary software and data products are generally
characterized by purchase order sale, short-duration contract, or a perpetual
license. The Company generally prices its products in catalog fashion. Most
often, product prices are determined by the target computer that the product
will run on, by some form of multiple-site volume discount arrangement, or by
some frequency of usage arrangement in the case of data products.
For CACI's information systems and professional services contracts, the
Company submits bids for work and products to be delivered. Bids are
frequently negotiated as to terms and conditions for schedule, specification,
delivery, and payment. CACI's contracts and subcontracts take on a wide range
of contractual agreement modes, including firm fixed-price obligations, cost
reimbursement contracts, labor hours and materials expense agreements, and
variants thereof, including fixed unit price, performance, and delivery
contracts. In general, revenue for this work is accrued as a percentage of
completion, which is based upon costs incurred in proportion to total expected
costs.
Often, the form of contract and terms will be specified by the client. This
is especially the case with government contracts. In these latter situations,
the Company may seek alternative arrangements or choose not to bid in those
cases where the contracting arrangement appears inappropriate to Company risk.
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By Company policy, fixed-price contracts require the approval of a senior
officer of the Company, and review and release approval by the Chief Executive
Officer.
At any one time, the Company may have several hundred separate contract
obligations. In FY 1995, the ten top revenue producing contracts accounted
for 50.4% of CACI's revenue, or $117.4 million. One contract for automated
litigation support to the Civil Division of the United States Department of
Justice ("DoJ"), accounted for 15.8% of total FY 1995 Company revenue.
In FY 1995, seventy-five percent (75%) of CACI's business volume stemmed from
Federal Government contracts, the remaining twenty-five percent (25%) coming
from commercial contracts and proprietary products sales. Fifty-one percent
(51%) of the Company's revenue came from U.S. Department of Defense ("DoD")
contracts, twenty-one percent (21%) came from contracts with DoJ, and three
percent (3%) came from other civil agency government clients.
The Company is endeavoring to continue expansion of its diversified business
portfolio. While desiring to decrease its dependence on DoD work per se, the
Company will, nonetheless, aggressively seek additional work from this large
agency. In FY 1995, the DoD revenue grew by 27% ($25.5 million) as a result
of the December 1993 acquisition of the Government Services business of
SofTech, Inc., coupled with internally generated revenues.
The Company is expanding its contract support to DoJ in the provision of
advanced automated litigation support services to DoJ's Environment and
Natural Resources Division and the Executive Office for U.S. Attorneys. This
work has demanded increasingly sophisticated project management processes and
high-technology infusions to keep pace with client caseloads. In view of this
requirement, the Company developed the ADIIS automated document image
indexing system, which improves the productivity for high-quality litigation
support for the department's attorneys.
The Company believes it is the largest supplier of litigation support and
related automation services to the U.S. Government. The Company intends to
seek additional work from the Federal Government and offer significant
economies to the Government through its specialization in this field.
During the past fiscal year, the Company examined a number of friendly
acquisition opportunities. On July 14, 1995, the Company announced its intent
to acquire Automated Sciences Group, Inc. ("ASG"), subject to due diligence,
and approval of a detailed acquisition agreement by each Company's Board of
Directors. On September 1, 1995, the Company completed its acquisition of ASG
for $4.9 million payable in cash over four years. ASG is expected to generate
approximately $16 million in annual revenue and approximately $400,000 in
annual net income. ASG provides information technology, engineering and
environmental services to DoD and U.S. Department of Energy ("DoE").
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SEASONAL NATURE OF BUSINESS
The Company's business in general is not seasonal, although the summer and
winter holiday seasons do affect both sales and revenue of the Company because
of their impact on the Company's labor sales in its Federal business and on
product and service sales by the Company's European operations. Variations
also may occur at the expiration of major contracts until such contracts are
renewed or new contracts obtained. Although the Company derives significant
revenue from the Federal Government, the timing of the Federal budget cycle
has historically not significantly impacted the Company's revenues.
RESEARCH AND DEVELOPMENT
During fiscal years 1995, 1994, and 1993, the Company spent $984,000,
$1,094,000, and $600,000 respectively, for research and development on current
and anticipated products.
ENVIRONMENTAL PROTECTION REQUIREMENTS
There has been no significant adverse impact on the Company's business as a
result of laws that have been enacted for the protection of the environment.
PATENTS, TRADEMARKS, TRADE SECRETS, AND LICENSES
The Company owns one United States patent. While the Company believes that
its patent is valid, it does not consider that its business is dependent on
patent protection in any material way.
The Company believes that its business is dependent to a significant extent on
its technical and organizational knowledge, practices, and procedures, in some
of which it claims proprietary interests.
The Company claims copyright, trademark, and proprietary rights in each of its
proprietary computer software and data products and documentation.
The Company presently owns approximately 37 registered United States
trademarks and service marks. All of the Company's registered United States
trademarks and service marks may be renewed indefinitely. The Company is a
party to agreements which give it the right to distribute computer software
and other products owned by other companies, and receive income therefrom.
The Company has developed and holds proprietary rights in a number of computer
software packages, databases and methodologies, including, but not limited to:
ACORN*, ADIIS, C-GATE#, COMNET II.5*, COMNET III, COSTPRO*, DORIS*,
EnterpriseView, FAR-TRIEVE*, InSite-USA#, IRIS, L-NET#, Legal Workbench,
MARKET*MASTER, MODSIM II*, MODSIM III, NETOBJECT, NETWORK II.5*, OBJECT.MGR,
Perfect-Mail*#, QuickBid*, REenterprise, RENovate, SACONS, SACONS-EDI, SACONS-
FEDERAL*, SIDE, SIMANIMATION*, SIMBASE, SIMFACTORY*, SIMFACTORY II.5,
SIMFLOW*, SIMGRAPHICS*, SIMLAB*, SIMOBJECT*, SIMPROCESS*, SIMSCENARIO*,
SIMSCRIPT II.5*, SIMSNIPS*, SIMSTRUCTOR*, SimTrainer*, SIMVIDEO*, SITELINE*,
SITE-POTENTIAL*#, SUPERSITE*, and ZIP-DEMOGRAPHICS*#.
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[* The marks above indicated with an asterisk (*) are registered service
marks or trademarks of CACI International Inc or its subsidiaries. All others
are service marks or trademarks of CACI International Inc or its
subsidiaries.]
[# The marks above indicated with a pound sign (#) contain a hyphen (-) to
represent the bullet point which is an integral component of each mark and
which cannot be printed due to electronic transmission limitations.]
In addition, subsidiaries of the Company claim foreign copyright, trademark,
and proprietary rights in the Company's proprietary computer software
products. These subsidiaries hold proprietary rights in computer software
products and databases including, but not limited to, ACORN* (and the related
Arts*ACORN*, Change*ACORN*, Custom*ACORN*, Financial*ACORN, Holiday*ACORN*,
Household*ACORN*, Investor*ACORN*, Property*ACORN*, Scottish*ACORN*), ALEX,
CACI MARKET*MASTER*, CACI National Mortgage Database*, CACI Savings Market
Database*, CATALIST*, Charity Focus, GEO-MARKETING*, GEOMATCH*, GEOREAD,
GEOTRIEVE*, Miracle, MONICA*, PIN, SITE*, SITE-POTENTIAL*, Shopping Centre
Planner and UpFront. Some of these subsidiaries are parties to agreements
pursuant to which they may have the right to distribute computer software
products owned by others and obtain income therefrom.
[* The marks above indicated with an asterisk (*) are registered service
marks or trademarks of CACI International Inc or its subsidiaries. All others
are service marks or trademarks of CACI International Inc or its
subsidiaries.]
BACKLOG
The Company's backlog as of June 30, 1995 was $590.3 million, of which $75.5
million was for orders believed to be firm. Total backlog as of June 30, 1994
was $726.5 million, of which $77.2 million represented firm orders. The
source of backlog is primarily contracts with the U.S. Government. It is
presently anticipated that all of the firm backlog will be filled during the
fiscal year ending June 30, 1996.
BUSINESS SEGMENTS, FOREIGN OPERATIONS, AND MAJOR CUSTOMER
The business segment, foreign operations, and major customer information
provided in the Company's Consolidated Financial Statements contained in this
Report are incorporated herein by reference. In particular, see Note 15,
Segment Information, of the Notes to Consolidated Financial Statements.
The following information is provided about the amounts of revenue
attributable to firm fixed price contracts (including proprietary software
product sales), time and materials contracts, and cost reimbursable contracts
of the Company during each of the last three fiscal years:
<TABLE>
<CAPTION>
Fiscal Year Ended Firm Time and Cost
June 30, Fixed Price Materials Reimbursable Total
- ----------------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
1995 $62,607,000 $106,869,000 $63,488,000 $232,964,000
1994 51,428,000 64,109,000 68,163,000 183,700,000
1993 47,535,000 44,690,000 52,923,000 145,148,000
/TABLE
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ITEM 2. PROPERTIES
As of June 30, 1995, CACI leased office space at 49 locations containing an
aggregate of approximately 476,400 square feet of space located in 19 states
and the District of Columbia. In five countries outside the United States,
CACI leased seven offices containing about 29,000 square feet of space.
CACI's leases expire primarily over the next seven years. In most cases, CACI
anticipates that leases will be renewed or replaced by other leases.
All of CACI's offices are in modern and well-maintained buildings. The
facilities are substantially utilized and adequate for present operations.
As of June 30, 1995, CACI International Inc maintained its corporate
headquarters in approximately 158,000 square feet of space at 1100 North Glebe
Road, Arlington, Virginia. See Note 9, Lease Commitments, of the Notes to
Consolidated Financial Statements, for additional information regarding the
Company's lease commitments.
ITEM 3. LEGAL PROCEEDINGS
Pfirman and Chrysogelos Litigation
Reference is made to Part II, Item 1, Legal Proceedings, in the Registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1991 for a
description of the two shareholder suits against the Registrant, and against
the directors of the Registrant entitled "Pfirman v. London, et al.", and
"Chrysogelos v. London, et al.". Reference is also made to Part I, Item 3 in
the Registrant's Annual Report on Form 10-K for the year ending June 30, 1994
for the major components of settlement for both lawsuits. Since the
aforementioned filing of the Registrant's reports and the filing of the
Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31,
1995, on which Part I, Item 3, Legal Proceedings, was current, the information
reported therein on pending legal proceedings instituted against the
Registrant has changed as set forth below.
By Order dated September 5, 1995, the Delaware Chancery Court approved final
implementation of the settlement in accordance with the report of the
Settlement Administrator, Gilardi & Company. Pursuant to that Order, the
Settlement Administrator will pay claims of shareholders against the
Settlement Fund totalling $18,556, and will receive $25,158 in fees and
expenses for its efforts. Registrant anticipates that the settlement will be
fully implemented within the next sixty days.
Pentagen Technologies International, Ltd., v. CACI International Inc, et al.
Reference is made to Part II, Item 1, Legal Proceedings, in the Registrant's
Quarterly Report on Form 10-Q for the period ending March 31, 1995 for the
most recently filed information concerning the lawsuit filed on July 1, 1993,
against the Registrant by Pentagen Technologies International, Ltd.
("Pentagen") in the Supreme Court for the State of New York alleging
conversion of intellectual property and violation of statutory duties as to
appropriation of computer software, and the lawsuit filed December 10, 1993
against the Registrant in the United States District Court for the Southern
District of New York alleging copyright and trademark infringement and
violation of the Major Fraud Against the United States Act. Since the filing
of the Registrant's report indicated above, the information reported therein
on pending legal proceedings has not changed.
<PAGE>
page 15
The Registrant believes that the allegations of these cases are without merit
and intends to vigorously defend itself.
CACI International Inc, et al v. Pentagen Technologies, Ltd., et al.
Reference is made to Part II, Item 1, Legal Proceedings, in the Registrant's
Quarterly Report on Form 10-Q for the period ending March 31, 1995 for the
most recently filed information concerning the lawsuit filed on December 22,
1993, in the United States District Court for the Eastern District of Virginia
against Pentagen Technologies International, Ltd., Baird Technologies, Inc.,
John C. Baird and Mitchell R. Leiser (principals of Pentagen and Baird).
The lawsuit was brought by the Registrant in order to provide an expeditious
redress of Pentagen's unfounded allegations including the allegations in the
lawsuits brought by Pentagen in New York as described above, and to compensate
the Registrant for any damage it may have suffered because of the defendants'
unfounded accusations.
As previously reported, the Court granted Summary Judgment in favor of CACI
holding that: (i) CACI's marketing of certain work to the United States Army
Materiel Command did not infringe Pentagen's MENTIX copyright or infringe any
trademark held by Pentagen; (ii) CACI's proprietary RENovate software
reengineering methodology does not infringe Pentagen's MENTIX copyright;
(iii) CACI's work on the Army's Sustaining Base Information Services ("SBIS")
contract does not infringe Pentagen's MENTIX copyright; and (iv) Pentagen and
its principals, John C. Baird and Mitchell R. Leiser, are liable for both
compensatory and punitive damages for defamation per se.
Since the filing of CACI's report indicated above, the information reported
therein on pending legal proceedings has changed as set forth below:
The case is scheduled for oral argument before the Fourth Circuit Court of
Appeals on September 28, 1995. The parties continue to be engaged in
discovery proceedings in connection with Registrant's efforts to enforce the
monetary awards previously obtained by CACI.
United States of America, ex rel., Pentagen Technologies International, Ltd.
v. CACI International Inc. et al.
On April 21, 1994, Pentagen Technologies International, Ltd. ("Pentagen")
filed under seal in the U.S. District Court for the Southern District of New
York a Complaint against CACI International Inc and its wholly-owned
subsidiaries, CACI Systems Integration, Inc. and CACI, INC.-FEDERAL
(hereinafter "CACI"), International Business Machines Corporation ("IBM"),
Loral Corporation ("Loral"), American Telephone and Telegraph Company
("AT&T"), PRC, Inc., I-Net, Inc., and Statistica, Inc. asserting the same
factual allegations that Pentagen asserted against CACI in the cases described
above, and alleging that the defendants violated the False Claims Act, 31 USC
Section 3732, in connection with the performance of the Sustaining Base
Information Services Contract (the "SBIS Contract") and certain marketing
efforts to the Army Materiel Command ("AMC"). After the Government declined
to intervene in the case, and after the U.S. District Court for the Eastern
District of Virginia ruled against Pentagen on the factual allegations which
underlie the case, on June 5, 1995 Pentagen served upon CACI an Amended
Complaint, which changed the wording but not the substance of the allegations
of the original Complaint. The Amended Complaint alleges as follows:
<PAGE>
page 16
(a) Count I - that CACI submitted marketing materials to the AMC proposing the
unauthorized use of Pentagen's MENTIX software which, if accepted by the AMC,
would have led to the submission of fraudulent invoices for payment by the
AMC; (b) Count II - that IBM, Loral and all of the proposed subcontractors,
including CACI, submitted a proposal for the SBIS Contract offering
performance techniques that have not been employed in performance of the
contract, causing the Army to pay double its anticipated cost of performance
and rendering all invoices for contract performance fraudulent; (c) Count III
- - that the Army's acceptance of the contractors' failure to perform the SBIS
Contract as proposed, its failure to modify the SBIS Contract or to declare
the contractors in breach thereof based on such failure caused all of the
invoices submitted on the SBIS Contract to be fraudulent; and (d) Count IV -
that certain unidentified "John Does" and "Jane Does" employed by the Army
breached their responsibility to the U.S. Government in administering the SBIS
Contract such that the injury to the Government flowing from the contractors'
failure to perform as proposed was not discovered in a timely fashion. The
Amended Complaint seeks in excess of $1 Billion in damages.
All defendants have filed motions to dismiss the case on the basis of its
numerous legal and factual inadequacies. By Order dated August 14, 1995, the
Court stayed all proceedings of the case pending a decision on the various
motions to dismiss.
CACI views this case as being entirely without legitimate factual or legal
bases, as evidenced in part by the fact that the factual assertions which
underlie the case already have been litigated and decided against Pentagen.
CACI intends to vigorously defend itself against the allegations of the case,
and to seek sanctions against Pentagen for this frivolous litigation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the fourth
quarter of the Registrant's fiscal year ended June 30, 1995, through the
solicitation of proxies or otherwise.
<PAGE>
page 17
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Registrant's Common Stock became publicly traded on June 2, 1986,
replacing paired units of Common Stock of CACI, Inc. and beneficial interests
in Common shares of CACI N.V. which had been traded in the over-the-counter
market.
From July 1, 1993 to June 30, 1995, Common Shares of the Registrant have been
quoted on the NASDAQ National Market System. The range of high and low sales
prices for each quarter during this period are as follows:
Fiscal 1995 Fiscal 1994
- ------------------------------- --------------------------------
Quarter High Low Quarter High Low
1st 11-1/8 7-1/2 1st 5-1/16 4-1/4
2nd 12 9 2nd 6 5
3rd 10-7/8 8-7/8 3rd 9-3/8 5-5/8
4th 12-7/8 8-3/4 4th 10-3/8 7-7/8
The Registrant has never paid a cash dividend. The present policy of the
Registrant is to retain earnings to provide funds for the operation and
expansion of its business. The Registrant does not intend to pay any cash
dividends at this time.
At August 31, 1995, the number of record shareholders of the Registrant's
Common Stock was approximately 1,300.
<PAGE>
page 18
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Year Ended June 30
------------------
1995 1994 1993 1992 1991
------------ ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
REVENUE $232,964,000 $183,700,000 $145,148,000 $139,878,000 $136,084,000
COSTS AND EXPENSES
Direct costs 126,442,000 97,584,000 75,804,000 74,536,000 66,896,000
Indirect costs and
selling expenses 87,688,000 71,126,000 57,797,000 55,289,000 62,644,000
Depreciation &
Amortization 4,981,000 4,341,000 3,367,000 2,556,000 3,029,000
------------ ------------ ------------ ------------ -----------
Operating expenses 219,111,000 173,051,000 136,968,000 132,381,000 132,569,000
------------ ------------ ------------ ------------ -----------
13,853,000 10,649,000 8,180,000 7,497,000 3,515,000
Interest expense 478,000 420,000 471,000 359,000 428,000
Shareholder lawsuit
and merger costs 0 0 901,000 0 0
Excess facilities &
lease termination
costs 0 0 1,921,000 0 2 ,428,000
------------ ------------ ------------ ----------- -----------
EARNINGS BEFORE
INCOME TAXES 13,375,000 10,229,000 4,887,000 7,138,000 659,000
Income taxes 5,219,000 3,893,000 1,907,000 2,928,000 (363,000)
------------ ------------ ------------ ---------- ----------
INCOME BEFORE
EXTRAORDINARY ITEM 8,156,000 6,336,000 2,980,000 4,210,000 1,022,000
Extraordinary item-
cost of shareholder
lawsuit settlement
(net of $194,000
tax benefit) 0 (300,000) 0 0 0
------------ ------------ ----------- ----------- -----------
NET INCOME $ 8,156,000 $ 6,036,000 $ 2,980,000 $ 4,210,000 $ 1,022,000
============ ============ =========== =========== ===========
EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE:
Income before
extraordinary item $ 0.77 $ 0.60 $ 0.29 $ 0.40 $ 0.10
Extraordinary item 0.00 (0.03) 0.00 0.00 0.00
Net income 0.77 0.57 0.29 0.40 0.10
AT YEAR END:
Total assets $ 74,642,000 $ 70,999,000 $58,417,000 $55,835,000 $ 49,428,000
Long-term obligations 2,340,000 2,492,000 2,898,000 2,901,000 2,696,000
Working capital 26,517,000 22,009,000 21,937,000 24,055,000 21,033,000
Shareholders' equity 44,485,000 37,738,000 30,497,000 28,923,000 24,959,000
</TABLE>
<PAGE>
page 19
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth the relative percentages that certain items of
expense and earnings bear to revenue for the fiscal years ended June 30, 1995,
1994 and 1993.
Percentage of Revenue
-------------------------------
FY 1995 FY 1994 FY 1993
------- ------- -------
Revenue 100.0% 100.0% 100.0%
Costs and Expenses
Direct Costs 54.3% 53.1% 52.3%
Indirect Costs & Selling Expenses 37.7% 38.7% 39.8%
Depreciation and Amortization 2.1% 2.4% 2.3%
------- ------- -------
Operating Expenses 94.1% 94.2% 94.4%
------- ------- -------
5.9% 5.8% 5.6%
Interest Expense 0.2% 0.2% 0.3%
Shareholder lawsuit & merger costs 0.0% 0.0% 0.6%
Lease Cancellation Costs 0.0% 0.0% 1.3%
------- ------- -------
Earnings Before Income Taxes 5.7% 5.6% 3.4%
Income Taxes 2.2% 2.1% 1.3%
Extraordinary Item - settlement of
shareholder suits (net of tax) 0.0% 0.2% 0.0%
------- ------- -------
Net Income 3.5% 3.3% 2.1%
======= ======= =======
FY 1995 COMPARED WITH FY 1994
Revenue increased by 26.8% or $49.26 million to $232.96 million from last
year's $183.70 million. The increase was the result of a $25.5 million (27%)
increase in revenue from DoD, a $20.3 million increase (70.4%) in revenue from
contracts with DoJ, a $1.4 million increase (3.1%) in revenue from commercial
customers, a $2.5 million increase (37.4%) in revenue from state governments,
and a $0.5 million decrease (6.9%) in revenue from Federal agencies other than
DoD and DoJ.
The $25.5 million increase in revenue from DoD contracts was due to (i) $14.5
million generated from new contracts and additions to the existing contract
business base, and (ii) $11.0 million in additional revenues resulting from
the December 1, 1993 acquisition of the Government Services business of
SofTech Inc. DoD revenue accounted for 51% of total revenue, the same
percentage as last year. Effective April 1, 1995, the Company chose to give
back to the prime contractor, a subcontract under which it had been performing
since October 1, 1993. This subcontract generated approximately $2.1 million
in revenue per quarter, but was breakeven in terms of its profitability. This
event will dampen the internal growth rate in DoD-derived revenue in future
years.
<PAGE>
page 20
The DoJ revenue growth of $20.3 million was a result of on-going DoJ
litigation, for which the Company provides automated litigation support
services. For the year, DoJ revenue accounted for 21.1% of total company
revenue versus last year's 15.7%. Revenue from DoJ is dependent upon the
level of DoJ litigation case load the Company is supporting at any period in
time and can fluctuate. The Company believes DoJ-derived revenue will remain
stable in the coming fiscal year.
The commercial revenue growth of $1.4 million was the result of $3.4 million
(15%) increase in U.K.-based revenue diminished by a decline in revenue from
commercial litigation support.
Direct contract costs grew by 29.6% ($28.8 million) from $97.6 million to
$126.4 million. Direct labor, the principal driving component of contract
revenue, was up $17.1 million, or 27%, while non-labor direct costs increased
$11.7 million or 34%. Direct costs as a percentage of revenue were up
slightly to 54.3% from 53.1%. This increase was primarily attributable to the
increasing competition in Federal contracts which is driving down the markups
over direct cost, and a relative increase in less profitable non-labor direct
costs, which increased from 18.9% to 19.9% of revenue.
Indirect costs grew by $16.6 million or 23.3% to $87.7 million from $71.1
million but, as a percentage of revenue, declined to 37.7% from 38.7%. The
decrease reflects the Company's continuing emphasis on reducing administrative
indirect costs while increasing funds for marketing and bid and proposal
("B&P") efforts. As a result of this management emphasis and despite the
26.8% increase in revenue, indirect labor increased by only $3.2 million and,
as a percentage of revenue, decreased from 7.9% to 7.6%.
Indirect costs also increased in B&P labor, incentive compensation and fringe
benefits. B&P labor increased in response to increases in the volume of
actual and planned proposals for the year. Incentive compensation (sales
commission and other pay for performance) grew because of the increased
revenue and profit, particularly in the information systems operation. Fringe
benefits, the largest category of indirect expenses (32% of total), increased
in proportion with the total payroll (direct labor, B&P labor, indirect labor
and incentive compensation), and an increase in the overall payroll tax rates.
Depreciation and amortization increased by $640,000 (14.7%) to $4.98 million
from $4.34 million. The increase was the result of: i) an increased level of
fixed assets (primarily computing and network equipment), necessitated by
internal growth and obtained through acquisitions, accounted for $217,000
(34%) of the growth, ii) change in depreciation life of computer equipment to
three years from five years accounted for $125,000 (19%) of the growth, and
iii) the other $298,000 (47%) of the growth was the result of the goodwill
amortization associated with the acquisitions discussed in Note 1 to the
financial statements.
Income before interest grew $3.2 million or 30% from $10.65 million to $13.85
million. The increase resulted primarily from the increase in revenue.
Interest costs totalled $478,000 (0.2% of revenue) and were up $58,000 (13.8%)
from last year's $420,000. The increase was the result of a 2.03% weighted
average interest rate increase from 4.98% to 7.01%, partially offset by a
$1.18 million (14.1%) reduction in the average line of credit balance from
$8.38 million to $7.20 million.
<PAGE>
page 21
Income before income taxes and extraordinary items rose to $13.38 million
(31%) from last year's earnings of $10.23 million. This 31% increase was
primarily attributable to the growth in operating income, with a slight offset
by the increase in interest expense.
The Company's effective tax rate increased to 39% from 38% last year because
of i) decrease in earnings from the Company's U.K. Subsidiary, where the
Company enjoys a lower tax rate, and ii) increase in the effective U.S. tax
rate caused by 82% growth in U.S. income.
The FY 1994 extraordinary item reflects a provision made during the quarter
ended September 30, 1993 to cover the costs of settling the outstanding
shareholder lawsuits. The provision equates to a $494,000 pre-tax expense,
and $300,000 net of tax. Also see comments under Liquidity below.
Earnings per share increased to $0.77 (35%) for the reasons discussed above.
FY 1994 COMPARED WITH FY 1993
Revenue increased by 26.6% or $38.6 million to $183.7 million from $145.1
million. The increase was the result of a $15.5 million (19.6%) increase in
revenue from DoD. The DoD increase was primarily the result of the
acquisition of the Government Services business of SofTech, Inc. which added
revenues of $13.8 million in FY 1994. Revenue from contracts with DoJ
increased by $8.3 million (40.5%) which was a result of new contract awards
for automated litigation support services which the Company won competitively
in the spring and summer of 1993. Revenue from commercial customers increased
by $8.7 million as a result of a 48% increase in revenue from the U.K.
operation. The substantial growth in U.K. revenue was the result of (i) an
increase in the size of the sales force; (ii) acquisitions in the first and
second quarter of the year; and (iii) an improvement in the U.K. economy.
Revenue from Federal agencies other than DoD and DoJ increased by $4.0 million
(139%). Revenue from state governments increased by $2.1 million (47.8%).
Direct contract costs grew by 29% ($21.8 million) from $75.8 million to $97.6
million. Direct labor, the principal driving component of contract revenue,
was up $13.8 million, or 28%, while non-labor direct costs increased $8.0
million or 30%. Direct costs as a percentage of revenue were up slightly to
53.1% from 52.3%. This increase was primarily attributable to the increasing
competition in Federal contracts which is driving down the markups over direct
cost, and a relative increase in less profitable non-labor direct costs, which
increased from 18.4% to 18.9% of revenue.
Indirect costs grew by $13.3 million or 23% to $71.1 million from $57.8
million but, as a percentage of revenue, declined to 38.7% from 39.8%. The
decrease reflects the Company's continuing emphasis on reducing administrative
indirect costs while increasing funds for marketing and B&P efforts. As a
result of this management emphasis and despite the 27% increase in revenue,
indirect labor increased by only $0.6 million or 4% and, as a percentage of
revenue, decreased from 9.6% to 7.9%. Indirect costs also increased in B&P
labor, incentive compensation and fringe benefits. B&P labor increased in
response to increases in the volume of actual and planned proposals for the
year. Incentive compensation (sales commission and other pay for performance)
grew because of the increased revenue and profit, particularly in the
commission-oriented U.K. operation. Fringe benefits, the largest category of
indirect expenses (32% of total), increased in proportion with the total
<PAGE>
page 22
payroll (direct labor, B&P labor, indirect labor and incentive compensation),
and an increase in the overall payroll tax rates.
Depreciation and amortization increased by $974,000 to $4.3 million from $3.4
million. An increased level of fixed assets (primarily computing and network
equipment), necessitated by internal growth and obtained through acquisitions,
accounted for 75% of the growth. The other 25% of the growth was the result
of the goodwill amortization associated with the acquisitions discussed in
Note 1 of the financial statements.
Income before interest, shareholder lawsuit and merger costs, and lease
litigation settlement expenses grew $2.4 million or 29% from $8.2 million to
$10.6 million. The increase results from the increase in revenue and a
decrease in operating costs, principally indirect costs as discussed above.
Interest costs totalled $420,000 (0.2% of revenue) and were down $51,000 (11%)
from last year's $471,000. The decrease reflects a 17% or $1.8 million
decrease in average borrowings from $10.14 million down to $8.38 million.
However, the effect of this decrease was partially offset by an increase in
the effective interest rate.
Income before income taxes and extraordinary items rose to $10.23 million from
FY 1993 earnings of $4.89 million. Income before income taxes and
extraordinary items included $0.9 million shareholder lawsuit and merger costs
and $1.9 million excess facilities and lease termination costs. Excluding
these costs from FY 1993 results, the income before income taxes and
extraordinary items would have been $7.7 million, an increase of $2.5 million
(33%). This 33% increase was attributable to the growth in operating income,
and the decline in interest expense.
The Company's effective tax rate decreased to 38% from 39% because of an
increase in earnings from the Company's U.K. subsidiary, where the Company
enjoys a lower tax rate, coupled with realizing the tax benefits from the
recent establishment of a Foreign Sales Corporation assigned to sell certain
U.S.-developed computer software products abroad.
During the first quarter of FY 1994, the Company recognized a provision for an
extraordinary item to cover the costs of the outstanding shareholder lawsuits.
The provision equates to a $494,000 pre-tax expense, and $300,000 net of tax.
See Note 14 to the Consolidated Financial Statements. Also see comments under
Liquidity below.
Earnings per share increased $0.28 (97%) for the reasons discussed above.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal sources of cash are from operating activities and bank
borrowings. The Company's primary requirement for working capital is to carry
billed and unbilled receivables, a majority of which are due under prime
contracts with the U.S. Government, or subcontracts thereunder.
During FY 1995, the Company purchased for Treasury Stock 275,000 shares of
Common Stock at an aggregate price of $2.2 million. In addition, the Company
is pursuing a strategy of small, synergistic, niche acquisitions designed to
broaden its client and product base. No acquisitions were made in FY 1995.
However, as mentioned earlier, on September 1, 1995, the Company acquired ASG
<PAGE>
page 23
for $4.9 million payable in cash over four years. The transaction will be
financed largely through internally generated funds, coupled with some bank
borrowing under its existing line of credit. ASG provides information
technology, engineering and environmental services to the DoD and DoE. ASG is
estimated to generate approximately $16 million in revenue and provide
approximately $400,000 in earnings during the first full year of operations.
In September 1993, the Company's U.K. subsidiary purchased the geodemographic
business of Pinpoint Analysis Ltd. ("Pinpoint") for approximately $750,000.
Pinpoint is a U.K.-based market analysis business and was a competitor of the
Company's U.K. operations. In October 1993, the Company's U.K. subsidiary
purchased the assets associated with the accounting software system of Miracle
Products Ltd. ("Miracle") for approximately $640,000. Miracle is a U.K.-based
accounting system and associated client base which complements certain of the
Company's existing product offerings in the U.K. On December 1, 1993, the
Company acquired the Government Services business of SofTech, Inc. for $4.2
million.
In July 1992, The Company purchased all of the outstanding Common Stock of
American Legal Systems Corp. for an initial purchase price of approximately
$2.8 million (also see Note 12 to the Consolidated Financial Statements). ALS
provides litigation support to commercial customers and the acquisition was
for the purpose of providing a commercial outlet for the technologies and
capabilities developed by the Company in support of its DoJ contracts. The
Company is currently evaluating the long-range profitability of this
acquisition.
As discussed in Note 14 to the Consolidated Financial Statements, under the
terms of the shareholder litigation settlement agreement originally reached in
September 1993, the Company agreed to initiate a contingent self-tender for
1.3 million of its Common Shares at a price of $6.00 per share in the event
that the average closing price for the Company's shares for twenty consecutive
trading days, between July 22, 1994 and February 28, 1995, was below $6.00 per
share. Since the Company's shares did not trade below $6.00 per share in that
time period, the self-tender expired. Under the terms of the agreement, the
Company is no longer obligated to tender its Common Shares.
The Company maintains a $20 million unsecured line of credit with Signet Bank
in the U.S., and a 500,000 pounds sterling unsecured line with the National
Westminster Bank in London, England (See Note 4 to the Consolidated Financial
Statement). These credit lines expire in March, 1996 and in November, 1995,
respectively. The Company believes they can be renewed and increased as
necessary to cover working capital or acquisition requirements. Accordingly,
the Company believes that the combination of internally generated funds,
available bank credit and cash on hand will provide the required liquidity and
capital resources for the foreseeable future.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
On the following pages are the Consolidated Financial Statements and Financial
Statement Schedules of CACI International Inc and subsidiaries for the years
ended June 30, 1995, 1994, and 1993, and Independent Auditors' Report.
<PAGE>
page 24
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
The Company had no disagreements with its independent accountant on accounting
principles, practices or financial statement disclosure during the two years
prior to the date of the most recent financial statements included in this
Report.
<PAGE>
page 25
Independent Auditor's Report
To the Board of Directors and Shareholders
CACI International Inc
Arlington, Virginia
We have audited the accompanying consolidated balance sheets of CACI
International Inc and subsidiaries as of June 30, 1995 and 1994, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the three years in the period ended June 30, 1995. Our
audits also included the financial statement schedule listed in Part IV at
Item 14(a)(2). These financial statements and financial statement schedule
are the responsibility of the Company's management. Our responsibility is to
express an opinion on the financial statements and financial statement
schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of CACI International Inc and
subsidiaries as of June 30, 1995 and 1994, and the results of their operations
and their cash flows for each the three years in the period ended June 30,
1995 in conformity with generally accepted accounting principles. Also, in
our opinion, the financial statement schedule taken as a whole, presents
fairly in all material respects the information set forth therein.
/s/
- ----------------------------
Deloitte & Touche LLP
Washington, D.C.
August 14, 1995
(September 1, 1995 as to Note 13)
<PAGE>
page 26
CACI INTERNATIONAL INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30
---------------------------
1995 1994
----------- -----------
CURRENT ASSETS
Cash and equivalents $ 1,996,000 $ 941,000
Accounts receivable:
Billed 42,188,000 42,074,000
Unbilled 6,134,000 4,695,000
----------- -----------
Total accounts receivable 48,322,000 46,769,000
Deferred income taxes 156,000 0
Prepaid expenses and other 3,860,000 5,068,000
----------- -----------
TOTAL CURRENT ASSETS 54,334,000 52,778,000
----------- -----------
PROPERTY AND EQUIPMENT, NET
Equipment and furniture 20,644,000 18,476,000
Leasehold improvements 1,809,000 1,648,000
----------- -----------
Property and equipment, at cost 22,453,000 20,124,000
Accumulated depreciation
and amortization (13,927,000) (12,369,000)
----------- -----------
TOTAL PROPERTY AND EQUIPMENT, NET 8,526,000 7,755,000
----------- -----------
ACCOUNTS RECEIVABLE, LONG TERM 4,489,000 3,318,000
GOODWILL, NET 5,413,000 5,921,000
OTHER ASSETS 1,182,000 1,001,000
DEFERRED INCOME TAXES 698,000 226,000
----------- -----------
TOTAL ASSETS $74,642,000 $70,999,000
=========== ===========
See notes to Consolidated Financial Statements
<PAGE>
page 27
CACI INTERNATIONAL INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (cont'd)
LIABILITIES AND SHAREHOLDERS' EQUITY
June 30
---------------------------
1995 1994
----------- -----------
CURRENT LIABILITIES
Note payable $ 0 $ 2,745,000
Accounts payable and accrued expenses 11,719,000 14,848,000
Accrued compensation and benefits 13,310,000 10,712,000
Deferred rent expense 561,000 454,000
Income taxes payable 1,944,000 1,829,000
Deferred income taxes 283,000 181,000
----------- -----------
TOTAL CURRENT LIABILITIES 27,817,000 30,769,000
----------- -----------
DEFERRED RENT EXPENSES 2,197,000 2,353,000
DEFERRED INCOME TAXES 143,000 139,000
SHAREHOLDERS' EQUITY
Common stock -
$.10 par value,
40,000,000 shares authorized,
13,568,000 and 13,490,000 shares issued 1,357,000 1,349,000
Capital in excess of par 5,053,000 4,591,000
Retained earnings 52,777,000 44,621,000
Cumulative currency
translation adjustments (1,040,000) (1,315,000)
Treasury stock, at cost
(3,526,000 shares & 3,251,000 shares) (13,662,000) (11,508,000)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 44,485,000 37,738,000
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $74,642,000 $70,999,000
=========== ===========
See Notes to Consolidated Financial Statements
<PAGE>
page 28
CACI INTERNATIONAL INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended June 30
------------------------------------------
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
REVENUE $232,964,000 $183,700,000 $145,148,000
------------ ------------ ------------
COSTS AND EXPENSES
Direct costs 126,442,000 97,584,000 75,804,000
Indirect costs &
selling expenses 87,688,000 71,126,000 57,797,000
Depreciation and amortization 4,981,000 4,341,000 3,367,000
------------ ------------ ------------
Total Operating Expenses 219,111,000 173,051,000 136,968,000
------------ ------------ ------------
13,853,000 10,649,000 8,180,000
Interest expense 478,000 420,000 471,000
Shareholder lawsuit
and merger costs 0 0 901,000
Lease litigation
settlement expenses 0 0 1,921,000
------------ ------------ ------------
INCOME BEFORE INCOME TAXES AND
EXTRAORDINARY ITEM 13,375,000 10,229,000 4,887,000
Income taxes 5,219,000 3,893,000 1,907,000
------------ ------------ ------------
INCOME BEFORE EXTRAORDINARY ITEM 8,156,000 6,336,000 2,980,000
------------ ------------ ------------
Extraordinary item-cost of
shareholder lawsuit settlement
(net of $194,000 tax benefit) 0 (300,000) 0
------------ ------------ ------------
NET INCOME $ 8,156,000 $ 6,036,000 $ 2,980,000
============ ============ ============
EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE:
Income before extraordinary item $ 0.77 $ 0.60 $ 0.29
Extraordinary item 0.00 (0.03) 0.00
Net income 0.77 0.57 0.29
AVERAGE NUMBER OF SHARES AND
EQUIVALENT SHARES OUTSTANDING 10,611,000 10,615,000 10,361,000
============ ============ ============
See Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
page 29
CACI INTERNATIONAL INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended June 30
------------------------------------------
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income $ 8,156,000 $ 6,036,000 $ 2,980,000
Reconciliation of net income
to net cash provided by
operating activities:
Depreciation & amortization 4,981,000 4,341,000 3,367,000
(Gain)/Loss on sale of
property and equipment (12,000) 54,000 44,000
Provision for deferred
income taxes (516,000) (816,000) (731,000)
Changes in operating assets
and liabilities:
Accounts receivable (1,534,000) (10,122,000) 911,000
Prepaid expenses & other assets 426,000 (593,000) (1,615,000)
Accounts payable and
accrued expenses (4,811,000) 5,902,000 (919,000)
Accrued compensation & vacation 2,664,000 3,637,000 (81,000)
Deferred rent expense (49,000) (26,000) (150,000)
Income taxes payable 64,000 715,000 256,000
------------ ------------ -----------
Net cash provided by
operating activities 9,369,000 9,128,000 4,062,000
------------ ------------ -----------
CASH FLOWS FROM
INVESTING ACTIVITIES:
Acquisitions of property
& equipment (4,172,000) (2,671,000) (3,330,000)
Proceeds from sale of
property and equipment 91,000 103,000 33,000
Payments for acquisitions 0 (4,508,000) (2,831,000)
Other 133,000 (411,000) (718,000)
------------ ------------ -----------
Net cash used in
investing activities (3,948,000) (7,487,000) (6,846,000)
------------ ------------ -----------
See Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
page 30
CACI INTERNATIONAL INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (cont'd)
<TABLE>
<CAPTION>
Year Ended June 30
------------------------------------------
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM
FINANCING ACTIVITIES:
Proceeds under line-of-credit 79,684,000 86,982,000 61,438,000
Payments under line-of-credit (82,429,000) (91,460,000) (59,057,000)
Issuance of common stock 470,000 1,161,000 139,000
Purchase of common stock
for treasury (2,154,000) (157,000) (111,000)
------------ ------------ -----------
Net cash (used in) provided by
financing activities (4,429,000) (3,474,000) 2,409,000
------------ ------------ -----------
EFFECT OF EXCHANGES RATES
ON CASH AND EQUIVALENTS: 63,000 49,000 (259,000)
------------ ------------ -----------
Net increase (decrease) in
cash and equivalents 1,055,000 (1,784,000) (634,000)
Cash and equivalents,
beginning of period 941,000 2,725,000 3,359,000
------------ ------------ -----------
Cash and equivalents,
end of period $ 1,996,000 $ 941,000 $ 2,725,000
============ ============ ===========
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Cash paid during the year for:
Income taxes, net of refunds $ 4,632,000 $ 1,784,000 $ 2,149,000
============ ============ ============
Interest $ 515,000 $ 410,000 $ 475,000
============ ============ ============
See Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
page 31
<TABLE>
<CAPTION>
CACI INTERNATIONAL INC AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Common Stock
-----------------------------------------
Class A* Class B Cumulative
--------------------- ----------------- Capital in Currency
Excess of Retained Translation Treasury
Shares Amount Shares Amount Par Earnings Adjustments Stock
---------- ---------- --------- -------- ---------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, July 1, 1992 13,089,000 $1,309,000 109,000 $11,000 $3,319,000 $35,605,000 $ (81,000) $(11,240,000)
Net Earnings 2,980,000
Currency translation
adjustments (1,435,000)
Exercise of Stock Options
(including $47,000
income tax benefit) 41,000 4,000 6,000 1,000 135,000
Treasury Shares purchased
(23,000 Class A) (111,000)
---------- ---------- --------- -------- ---------- ----------- ------------- -------------
BALANCE, June 30, 1993 13,130,000 $1,313,000 115,000 $12,000 $3,454,000 $38,585,000 $ (1,516,000) $(11,351,000)
Net Earnings 6,036,000
Currency translation
adjustments 201,000
Exercise of Stock Options
(including $494,000
income tax benefit) 245,000 24,000 1,137,000
Conversion of Class B
shares 115,000 12,000 (115,000) (12,000)
Treasury Shares purchased
(18,923 shares) (157,000)
---------- ---------- --------- -------- ---------- ----------- ------------- -------------
BALANCE, June 30, 1994 13,490,000 $1,349,000 0 $ 0 $4,591,000 $44,621,000 $ (1,315,000) $(11,508,000)
Net Earnings 8,156,000
Currency translation
adjustments 275,000
Exercise of Stock Options
(including $184,000
income tax benefit) 78,000 8,000 462,000
Treasury Shares purchased
(275,000 shares) (2,154,000)
---------- ---------- --------- -------- ---------- ----------- ------------- -------------
BALANCE, June 30, 1995 13,568,000 $1,357,000 0 $ 0 $5,053,000 $52,777,000 $ (1,040,000) $(13,662,000)
* As of June 30, 1994, all Class A Common Stock was classified as Common Stock.
See Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
page 32
CACI INTERNATIONAL INC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1995, 1994 AND 1993
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Activities
The Company is an international information systems and high technology
services corporation. It is a world leader in computer-based information
technology systems, custom software, integration and operations, imaging and
document management, simulation, and proprietary database and software
products. The Company provides worldwide services in support of United States
national defense and civilian agencies, state governments and commercial
enterprises.
Principles of Consolidation
The consolidated financial statements include the statements of CACI
International Inc and its wholly-owned subsidiaries (the "Company"). All
significant intercompany balances and transactions have been eliminated in
consolidation.
Revenue Recognition
Revenue on cost-plus-fee contracts is recognized to the extent of costs
incurred plus a proportionate amount of the fee earned. Revenue on fixed-
price contracts is recognized on the percentage of completion method based on
costs incurred in relation to total estimated costs. Revenue on time and
materials contracts is recognized to the extent of billable rates times hours
delivered plus materials expense incurred. Revenue from software license
sales is recognized upon delivery when there is no significant obligation to
perform after the sale, but is recognized under the percentage of completion
method when there is significant obligation for production, modification or
customization after the sale. Revenue from maintenance support services on
these products is nonrefundable and generally recognized on a straight-line
basis over the term of the service agreement. Provisions for estimated losses
on uncompleted contracts are recorded in the period such losses are
determined.
The Company's United States Government contracts (approximately 75% of total
revenue) are subject to subsequent government audit of direct and indirect
costs. All such incurred cost audits have been completed through June 30,
1991. Management does not anticipate any material adjustment to the
consolidated financial statements for later periods.
<PAGE>
page 33
Property and Equipment
Property and equipment is recorded at cost. Depreciation of equipment has
been provided over the estimated useful lives of three to ten years of the
respective assets, using primarily the straight-line method. Leasehold
improvements are generally amortized over the respective remaining lease term
using the straight-line method, which is shorter than the useful life.
Capitalized Software Costs
The Company capitalizes certain product-related software development costs
after technological feasibility and marketability have been demonstrated.
These costs are amortized on a product-by-product basis over their estimated
economic useful lives, which range from 3 to 5 years.
Income Taxes
The Company adopted Statement of Financial Accounting Standards ("SFAS") No.
109 "Accounting for Income Taxes", effective July 1, 1993. This accounting
standard required the use of the asset and liability approach for financial
accounting and reporting for income taxes. There was no material cumulative
effect on income in the financial statements from the adoption of SFAS 109.
The provision for income taxes includes taxes currently payable and those
deferred due to the differences between the financial statements and the tax
bases of assets and liabilities.
U.S. income taxes have not been provided on $14,793,000 in undistributed
earnings of foreign subsidiaries that have been permanently reinvested outside
the United States.
Currency Translation
The assets and liabilities of the Company's foreign subsidiaries whose
functional currency is other than the U.S. Dollar are translated at the
exchange rates in effect on the reporting date, and income and expenses are
translated at the weighted average exchange rate during the period. The net
effect of such translation gains and losses are not included in determining
net income but are accumulated as a separate component of shareholders'
equity. Foreign currency transaction gains and losses are included in
determining net income.
Earnings per Share
Earnings per share is computed by dividing net earnings by the weighted
average number shares and equivalent shares outstanding during each of the
years ended June 30, 1995, 1994 and 1993 of 10,611,000, 10,615,000, and
10,361,000, respectively. The weighted averages include the number of shares
issuable upon exercise of stock options granted under the employee stock
incentive plan after the assumed repurchase of shares with the related
proceeds.
<PAGE>
page 34
Statement of Cash Flows
Short-term investments with an original maturity of three months or less are
considered cash equivalents.
Goodwill
The excess of cost over fair market value of net assets acquired is being
amortized, using the straight line method, for periods ranging from 3 to 15
years. Accumulated amortization was $1,075,000 and $529,000 at June 30, 1995
and June 30, 1994, respectively.
Statement Presentation
Certain prior period amounts have been reclassified to conform with the
current year's presentation.
NOTE 2. ACCOUNTS RECEIVABLE
Total accounts receivable are net of allowance for doubtful accounts of
$1,415,000 and $1,664,000 at June 30, 1995 and June 30, 1994, respectively.
Accounts Receivable are classified as follows:
June 30, 1995 June 30, 1994
------------- -------------
BILLED AND BILLABLE RECEIVABLES:
Billed receivables $ 35,960,000 $ 35,668,000
Billable receivables at end of period 6,228,000 6,406,000
------------- -------------
TOTAL BILLED AND BILLABLE RECEIVABLES 42,188,000 42,074,000
------------- -------------
UNBILLED RECEIVABLES:
Unbilled pending receipt of contractual
documents authorizing billing 5,799,000 4,413,000
Unbilled Retainages and fee withholds
expected to be billed
within the next 12 months 335,000 282,000
------------- -------------
6,134,000 4,695,000
Unbilled retainages and fee withholds
expected to be billed
beyond the next 12 months 4,489,000 3,318,000
------------- -------------
TOTAL UNBILLED RECEIVABLES 10,623,000 8,013,000
------------- -------------
TOTAL ACCOUNTS RECEIVABLE: $ 52,811,000 $ 50,087,000
============= =============
<PAGE>
page 35
NOTE 3. CAPITALIZED SOFTWARE DEVELOPMENT COSTS
The costs capitalized and amortized for the years ended June 30, 1995, 1994,
and 1993 were as follows:
Annual Activity Year Ended June 30,
----------------------------------------
1995 1994 1993
------------ ------------ ------------
Balance, beginning of year $ 865,000 $ 775,000 $ 555,000
Capitalized during year 478,000 332,000 412,000
Amortized during year (275,000 (242,000) (192,000)
Balance, end of year $ 1,068,000 $ 865,000 $ 775,000
Amounts included in:
Current assets $ 263,000 $ 275,000 $ 254,000
Other assets $ 805,000 $ 590,000 $ 521,000
NOTE 4. NOTE PAYABLE
The Company has a $20 million revolving credit agreement with Signet Bank
which expires on March 31, 1996. Under this agreement, the Company had
outstanding borrowings of $0 at June 30, 1995 and $2,745,000 at June 30, 1994.
Interest is charged on the outstanding borrowings at the lower of the bank's
daily prime commercial lending rate or the Federal Funds rate plus 0.90% and
1.25% at June 30, 1995 and 1994 respectively. The applicable interest rate on
the loan balance was 7.01% and 7.21% at June 30, 1995 and 1994, respectively.
The credit agreement requires, among other provisions, the maintenance of
certain levels of net worth and working capital and places certain
restrictions on cash dividends and additional debt. Throughout FY 1995 and FY
1994, the Company was in compliance with all bank covenants.
<PAGE>
page 36
NOTE 5. INCOME TAXES
The provision (benefit) for income taxes consists of:
State
Year Ended and
June 30 Federal Local Foreign Total
- ---------- ---------- ---------- ---------- ----------
1995
Current $3,649,000 $ 798,000 $ 291,000 $4,738,000
Deferred 207,000 46,000 228,000 481,000
---------- ---------- ---------- ----------
$3,856,000 $ 844,000 $ 519,000 $5,219,000
========== ========== ========== ==========
1994
Current $1,894,000 $ 696,000 $1,151,000 $3,741,000
Deferred 97,000 21,000 34,000 152,000
---------- ---------- ---------- ----------
$1,991,000 $ 717,000 $1,185,000 $3,893,000
========== ========== ========== ==========
1993
Current $2,311,000 $ 260,000 $ 610,000 $3,181,000
Deferred (1,042,000) (85,000) (147,000) (1,274,000)
---------- ---------- ---------- ----------
$1,269,000 $ 175,000 $ 463,000 $1,907,000
========== ========== ========== ==========
<PAGE>
page 37
A reconciliation of the income tax provision (benefit) and the amount computed
by applying the statutory U.S. income tax rate of 34% is as follows:
Year Ended June 30
----------------------------------------
1995 1994 1993
---------- ---------- ----------
Amount at Statutory U.S. rate $4,220,000 $3,478,000 $1,662,000
State taxes, net of U.S.
income tax benefit 517,000 450,000 116,000
Other expenses not deductible
for tax purposes 300,000 80,000 81,000
Taxes on foreign earnings at
different effective rates 297,000 209,000 48,000
Extraordinary item 0 (194,000) 0
Foreign/research and development
tax credits (115,000) (130,000) 0
---------- ---------- ----------
Total $5,219,000 $3,893,000 $1,907,000
========== ========== ==========
The net current and non-current components of the deferred income tax accounts
as shown on the consolidated balance sheet at June 30, 1995 are:
Total
----------
Net current deferred tax asset $ 156,000
Net non-current deferred tax asset 698,000
Net current deferred tax liability (283,000)
Net non-current deferred liability (143,000)
----------
Total net deferred asset (liability) $ 428,000
==========
The deferred tax assets and tax liabilities at June 30, 1995 are:
Assets: 1995
----------
Accrued vacation and other expenses $ 3,276,000
Deferred rent 1,065,000
Foreign transactions 156,000
Pension 207,000
----------
Total deferred assets $ 4,704,000
----------
Liabilities:
Unbilled revenue $(3,698,000)
Depreciation (516,000)
Other (62,000)
----------
Total deferred liabilities $(4,276,000)
----------
Net deferred tax asset: $ 428,000
==========
<PAGE>
page 38
Commencing July 1, 1987, the Company adopted the accrual net of unbillable
revenue method of accounting for tax purposes. Under this method, only
revenue that is contractually billable is used to compute taxable income while
certain expenses are not currently deductible.
The Company adopted SFAS No. 109 "Accounting for Income Taxes" effective July
1, 1993. Prior years financial statements were not restated. There was no
material cumulative effect on the financial statements as a result of adoption
of this standard.
NOTE 6. COMMON STOCK
At June 30, 1993, the Company's Common Stock consisted of Class A and Class B
Common Stock, each with a $.10 par value, and each with 40,000,000 shares
authorized. There were 13,130,000 Class A shares and 115,000 Class B shares
outstanding at June 30, 1993, of which 3,194,000 Class A shares and 39,000
Class B shares were carried in Treasury at their acquisition cost. In October
1993, by the provisions of the Company's Charter, the Class B shares
automatically converted to Class A Common Stock on a one-for-one basis, after
which the Company had only one class of Common Stock. As of June 30, 1995 and
1994, there were 13,568,000 and 13,490,000 shares of Common Stock outstanding
respectively of which 3,526,000 and 3,251,000 shares respectively are held in
Treasury and are carried at their acquisition cost.
NOTE 7. STOCK INCENTIVE PLAN
The Company has an employee stock incentive plan (the "Plan") which provides
that key employees may be awarded some or all of the following: nonqualified
stock options; incentive stock options within the meaning of the Internal
Revenue Code; and the option to purchase Common Stock. The stock option
exercise prices would generally be at fair market value on the date of grant.
The period during which each option is exercisable is determined when granted,
but in no event are they exercisable later than ten years from the date of
grant or after December 31, 2000. Any debt securities awarded under the Plan
would be subordinate to existing and future secured debt of the Company and
would be offered to the employees for purchase at their fair market value.
The maximum number of shares which may be issued under the Plan is 5,200,000.
As discussed in Note 6 above, the Class B Common Stock was converted
automatically to Common Stock in October, 1993, and no further options for
Class B will be issued.
<PAGE>
page 39
Stock option activity and price information regarding the Plan follows:
Number Exercise
of shares Price
---------- -----------
Shares Under Option, July 1, 1992 1,630,000 $1.87-$5.09
Granted 28,000 $4.44-$4.75
Exercised (41,000) $1.87-$2.59
Forfeited (98,000) $1.87-$5.09
----------
Shares Under Option, June 30, 1993 1,519,000 $1.87-$5.03
Granted 108,000 $5.87-$5.94
Exercised (244,000) $1.87-$4.75
Forfeited (2,000) $3.50
----------
Shares Under Option, June 30, 1994 1,381,000 $1.87-$5.94
Granted 133,000 $8.56-$10.88
Exercised (78,000) $1.87-$5.94
Forfeited (22,000) $1.87-$4.44
----------
Shares Under Option, June 30, 1995 1,414,000 $1.87-$10.88
==========
Options Exercisable, June 30, 1995 891,000 $1.87-$10.88
==========
Exercise prices are based on the market price of the Company's Common Stock at
the date the options are granted.
NOTE 8. PENSION PLAN
The Company has a defined contribution pension plan covering approximately 80%
of its employees. The total consolidated pension expense for each of the
years ended June 30, 1995, 1994, and 1993 was $2,565,000, $1,939,000, and
$1,690,000 respectively. The Company funds current pension costs as they
accrue annually. The plan is qualified under the United States Internal
Revenue Code, as determined by the United States Internal Revenue Service.
NOTE 9. LEASE COMMITMENTS
The Company conducts its operations from leased office facilities, all of
which are classified as operating leases and expire primarily over the next
seven years.
The following is a schedule of future minimum lease payments under non-
cancelable leases with a remaining term greater than one year as of June 30,
1995:
Year Ending Operating
June 30, Leases
----------- -----------
1996 $ 8,165,000
1997 5,965,000
1998 5,290,000
1999 4,132,000
2000 3,293,000
Later Years 4,578,000
----------
Total minimum lease payments $31,423,000
==========
<PAGE>
page 40
Operating leases reflect the minimum lease payments for office facilities net
of a minimal amount of sublease income. The Company has no significant long-
term operating leases for office equipment.
Rent expense incurred from operating leases of real estate for 1995, 1994 and
1993 amounted to $7,712,000, $6,708,000, and $8,132,000 respectively. Rent
expense arising from operating leases of equipment amounted to approximately
$664,000, $494,000, and $466,000, in 1995, 1994, and 1993, respectively.
NOTE 10. EXCESS FACILITIES AND LEASE TERMINATION COST
The excess facilities and lease termination costs incurred during the year
ended June 30, 1993 consisted of the lease termination cost of $1.921 million.
In April, 1991, the Company entered into a new lease agreement in an effort to
consolidate various operations into one location. In connection with this
agreement, the Company canceled an existing lease for its office space located
in Fairfax, Virginia and, as a result, paid a lease termination penalty of
$1,418,000. The lessor of the new facility reimbursed the Company for the
termination penalty. The Company was required to expense the termination cost
in 1991 and allocate the benefit of the reimbursement as a reduction in the
rent expense over the future life of the new lease. The Company moved to
their new location in fiscal year 1992. The unamortized balance of this
amount is included in deferred rent in the accompanying consolidated balance
sheets.
As a result of the Company's cancellation of the office lease in Fairfax,
Virginia discussed above, the landlord sued the Company for breach of the
lease. To settle this litigation, the Company paid the landlord $1.7 million
and incurred legal fees of $221,000 during the FY93 Second Quarter.
NOTE 11. CONTINGENCIES AND LITIGATION
Pentagen Technologies International, Ltd. ("Pentagen") filed two suits against
CACI International Inc and two of its subsidiaries (collectively, "CACI").
One suit sought damages of $8 million and the other sought damages of $78
million and punitive damages of $234 million. In order to provide an
expeditious redress of Pentagen's unfounded allegations and to compensate the
Company for any damage it may have suffered, the Company subsequently filed
suit against Pentagen. In March 1994, the United States District Court for
the Southern District of New York granted the Company's request that
Pentagen's pending suit against the Company that had been previously removed
from the New York Supreme Court be combined with the suit pending in the
Southern District and be designated as "related" suits. Subsequently, these
suits were both stayed pending further proceedings in the Company's suit in
the Virginia Court. In June 1994, the Virginia Court issued an order
declaring among other things, that CACI had not infringed Pentagen's copyright
nor any trademark held by Pentagen, that Pentagen is liable for damages for
tortious interference with CACI's business, and that Pentagen and the two
Pentagen and Baird principals are liable for damages for defamation. In a
subsequent order by the Virginia Court, CACI was awarded attorneys' fees of
$110,550, court costs of $61,500, compensatory damages for defamation of
$1,000, and punitive damages for defamation of $10,000. While the New York
cases are still pending, it is expected that they will be resolved in the
Company's favor. In any event, management is of the opinion that the ultimate
resolution of this matter will not have a material adverse effect on the
Company's financial statements.
<PAGE>
page 41
In June 1995, Pentagen served upon CACI another lawsuit alleging that CACI and
other defendants had violated the False Claims Act and seeking damages from
all defendants in an amount exceeding One Billion Dollars. This suit arises
from the same facts that underlie the other cases. All defendants have moved
for dismissal of the case. Management is of the opinion that the ultimate
resolution of this case will not have a material adverse affect on the
Company's financial statements.
The Company is involved in various other lawsuits, claims, and administrative
proceedings arising in the normal course of business. Management is of the
opinion that any liability or loss associated with such matters will not have
a material adverse effect on the Consolidated Financial Statements.
NOTE 12. ACQUISITIONS
SofTech, Inc.
On December 1, 1993, the Company purchased certain contracts and assets
consisting of the Government Services business of SofTech, Inc. for an initial
purchase price of $4.2 million which has been allocated as $0.9 million for
the fair value of fixed assets acquired and $3.3 million to Goodwill.
The results of this acquisition have been included in the Company's operating
results beginning December 1, 1993. If the acquisition had occurred at the
beginning of fiscal 1994, revenues would have increased by approximately $10
million and $0.3 million in net income, which would have increased earnings
per share by $0.03. Given that this acquisition represents only a limited
number of contracts and assets of SofTech, Inc., it is impractical to impute
accurately the comparable revenues and/or earnings this acquisition would have
had on the Company's 1993 fiscal period.
American Legal Systems Corp.
On July 30, 1992, the Company acquired all of the outstanding stock of ALS for
an initial purchase price of approximately $2.8 million. ALS is a service
company providing litigation support to commercial customers. The transaction
was accounted for as a purchase. The Company financed the transaction with
bank borrowings under its existing unsecured line of credit. ALS's financial
statements have been consolidated beginning August 1, 1992. Had the
acquisition occurred at the beginning of the 1993 fiscal period, the effect on
the Company's financial statements would not have been material.
The purchase price is subject to an increase of up to $3 million provided
significant performance objectives are reached during each of the three
measurement years beginning October 1, 1992. These performance objectives
will not be met.
Other Acquisitions
During FY 1994, the Company purchased a majority of the contracts and assets
from Pinpoint and Miracle. The excess purchase price over the net book value
of the net assets acquired from these acquisitions equaled $330,000. This
excess has been recorded as goodwill and will be amortized for periods ranging
from 3 to 15 years. Had the acquisitions occurred at the beginning of 1994 or
1993 fiscal periods, the effect on the Company's financial statements would
not have been material.
<PAGE>
page 42
NOTE 13. SUBSEQUENT ACQUISITIONS
On September 1, 1995, the Company purchased all of the outstanding stock of
Automated Sciences Group, Inc. for $4.9 million payable in cash over four
years. ASG provides information technology, engineering, and environmental
services to DoD and DoE. The purchase price is subject to a maximum $500,000
holdback contingent on the collectability of certain receivables. Because
this acquisition occurred in FY 1996, it had no impact on the Company's
operating results for FY 1995. The transaction will be financed primarily
through internally generated funds, coupled with some bank borrowing under the
Company's existing line of credit.
NOTE 14. SETTLEMENT OF SHAREHOLDER LAWSUITS
By Orders dated November 15, and December 1, 1994, the Delaware Chancery Court
and the Federal District Court for the District of Columbia accepted
settlement of the outstanding shareholder suits. Pursuant to the settlement
agreement, the Company reimbursed the plaintiff $598,000 to cover legal fees
and expenses. Pursuant to the Order of the Delaware Chancery Court dated
September 5, 1995, the company has been authorized to pay a total of $18,556
of claims against the Settlement Fund and $25,156 in fees and expenses of
Gilardi & Company, the Settlement Administrator. These payments constitute
the Company's final obligations under the Settlement Agreement.
<PAGE>
page 43
NOTE 15. SEGMENT INFORMATION
Revenue from contracts with the United States government for 1995, 1994, and
1993 amounted to approximately $176,000,000 (75% of revenues),
$130,000,000 (71% of revenues), and $103,000,000 (71% of revenues),
respectively.
Information about operations in the United States and foreign countries
(primarily in Western Europe), after the elimination of intercompany
transactions, consists of:
<TABLE>
<CAPTION>
Earnings
Before Identifiable
Income Net Assets at
Revenue Taxes Earnings* Year End
------------ ----------- ---------- -----------
<S> <C> <C> <C> <C>
1995
United States $205,836,000 $12,592,000 $8,065,000 $58,716,000
Foreign 27,128,000 783,000 91,000 15,926,000
------------ ----------- ---------- -----------
Combined $232,964,000 $13,375,000 $8,156,000 $74,642,000
============ =========== ========== ===========
1994
United States $156,775,000 $ 6,906,000 $4,427,000 $56,568,000
Foreign 26,925,000 2,829,000 1,609,000 14,431,000
------------ ----------- ---------- -----------
Combined $183,700,000 $ 9,735,000** $6,036,000 $70,999,000
============ =========== ========== ===========
1993
United States $127,413,000 $ 3,854,000 $2,641,000 $48,826,000
Foreign 17,735,000 1,023,000 339,000 9,591,000
------------ ----------- ---------- -----------
Combined $145,148,000 $ 4,877,000 $2,980,000 $58,417,000
============ =========== ========== ===========
* Contributions to consolidated net earnings after income tax effects.
** 1994 includes extraordinary loss of $494,000.
</TABLE>
<PAGE>
page 44
NOTE 16. QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
Quarter 1ST 2ND 3RD 4TH
------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Year Ended June 30, 1995
- ------------------------
Revenue $54,881,000 $57,394,000 $61,620,000 $59,069,000
Costs and Expenses 51,745,000 54,168,000 58,124,000 55,552,000
Income Taxes 1,223,000 1,238,000 1,382,000 1,376,000
Net Earnings 1,913,000 1,988,000 2,114,000 2,141,000
=========== =========== =========== ===========
Earnings per Share $ 0.18 $ 0.19 $ 0.20 $ 0.20
Year Ended June 30, 1994
- ------------------------
Revenue $38,200,000 $43,966,000 $48,953,000 $52,581,000
Costs and Expenses 35,975,000 41,586,000 46,178,000 49,732,000
Income Taxes 867,000 924,000 1,089,000 1,013,000
Income before
Extraordinary Item 1,358,000 1,456,000 1,686,000 1,836,000
Extraordinary item-
Cost of Shareholder
Lawsuit Settlement
(Net of $194,000
Tax Benefit) (300,000) 0 0 0
Net Income 1,058,000 1,456,000 1,686,000 1,836,000
=========== =========== =========== ===========
Earnings per share
Income before
Extraordinary Item $ 0.13 $ 0.14 $ 0.16 $ 0.17
Extraordinary Item (0.03) 0.00 0.00 0.00
Net Income 0.10 0.14 0.16 0.17
Year Ended June 30, 1993
- ------------------------
Revenue $34,885,000 $37,339,000 $36,337,000 $36,587,000
Costs and Expenses 33,171,000 37,628,000 34,561,000 34,901,000
Income Taxes 668,000 (112,000) 683,000 668,000
Net Earnings 1,046,000 (177,000) 1,093,000 1,018,000
=========== =========== =========== ===========
Earnings per Share $ 0.10 $ (0.02) $ 0.11 $ 0.10
</TABLE>
The above quarterly financial data is unaudited, but in the opinion of
management, all adjustments necessary for a fair presentation of the
selected data for these interim periods have been included.
<PAGE>
page 45
CACI INTERNATIONAL INC AND SUBSIDIARIES
SCHEDULES TO BE INCLUDED IN FORM 10-K
JUNE 30, 1995, 1994 AND 1993
<PAGE>
page 46
SCHEDULE II
CACI INTERNATIONAL INC AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR YEARS ENDED JUNE 30, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
Balance Other
at Changes Balance
Beginning Additions Add at End of
Description of Period at Cost Deductions (Deduct) Period
- ----------- --------- --------- ------------ ---------- ---------
<S> <C> <C> <C> <C> <C>
1995
- ----
Reserves deducted
from assets to
which they apply:
Allowances for
doubtful
receivables $1,664,000 $493,000 $ (754,000) $ 12,000 $1,415,000
========== ======== ========== ========= ==========
1994
- ----
Reserves deducted
from assets to
which they apply:
Allowances for
doubtful
receivables $2,312,000 $294,000 $(1,105,000) $ 163,000 $1,664,000
========== ======== =========== ========= ==========
1993
- ----
Reserves deducted
from assets to
which they apply:
Allowances for
doubtful
receivables $2,030,000 $274,000 $ 640,000 $(632,000) $2,312,000
========== ======== =========== ========= ==========
</TABLE>
<PAGE>
page 47
PART III
The Information required by Items 10, 11, 12, and 13 of Part III of Form 10-K
has been omitted in reliance on General Instruction G(3) and is incorporated
herein by reference to the Company's definitive proxy statement to be filed
with the SEC pursuant to Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended.
<PAGE>
page 48
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) Financial Statements
Independent Auditors' Report
Consolidated Balance Sheet as of June 30, 1995 and 1994
Consolidated Statement of Operations for the Years Ended
June 30, 1995, 1994 and 1993
Consolidated Statement of Cash Flows for the Years Ended
June 30, 1995, 1994 and 1993
Consolidated Statement of Shareholders' Equity for the
Years Ended June 30, 1995, 1994 and 1993
Notes to Consolidated Financial Statements
(a) (2) Financial Statement Schedule
Schedule II - Valuation and Qualifying Accounts for the
Years Ended June 30, 1995, 1994 and 1993
(a)(3) Exhibits (listed by numbers corresponding to the exhibit table of
Item 601 regulation S-K) and Exhibit index.
(3) Articles of Incorporation and By-laws:
3.1 Certificate of Incorporation of the Registrant, as amended
to date.
3.2 By-laws of CACI International Inc, as amended to date.
(4) Instruments Defining the Rights of Security Holders:
4.1 Clause FOURTH of the Registrant's Certificate of Incorporation,
incorporated above as Exhibit 3.1.
4.2 Shareholders' Agreement dated as of December 1, 1985
(incorporated herein by reference to Appendix D to the Proxy
Statement included in the S-4).
(10) Material Contracts:
10.1 The 1986 Employee Stock Incentive Plan of the Registrant is
incorporated by reference to the Registration Statement on Form
S-8 filed with the Commission on October 13, 1987
(File No. 33-17864).
10.2 The CACI Monthly Stock Investment Plan is incorporated by
reference to the Registration Statement on Form S-8 filed with
the Commission on June 24, 1988 (File No. 33-22766).
10.3 Employment Agreement between the Registrant and Dr. J. P. London
dated August 17, 1995.
<PAGE>
page 49
10.4 Stock Purchase Agreement between the Registrant and Executor of
the Estate of Herbert W. Karr (incorporated herein by reference
from Exhibit 10.5 of the Registrant's Annual Report on Form 10-K
filed with the Securities and Exchange Commission for the fiscal
year ended June 30, 1991).
10.5 Form of Stock Option Agreement between the Registrant and
certain employees (incorporated herein by reference from Exhibit
10.6 of the Registrant's Annual Report on Form 10-K filed with
the Securities and Exchange Commission for the fiscal year ended
June 30, 1991).
10.6 Merger Agreement dated July 30, 1992 between the Registrant,
American Legal Systems Corp., Michael McIntosh, A. Martin
Erim and certain other parties (incorporated herein by reference
from Exhibit 10.7 of the Registrant's Annual Report on Form 10-K
filed with the Securities and Exchange Commission for the fiscal
year ended June 30, 1992).
(11) Computation of Earnings per Common and Common Equivalent Share
(refer to Exhibit XI, Page 50).
(21) Significant subsidiaries of the Registrant, as defined in Section
1-02(w) of regulation.
(27) Financial Data Schedule
(b) - The Registrant filed a Current Report on Form 8-K as of August 5,
1994, in which the Registrant reported that it has reached final
agreement on the settlement terms of the two shareholder lawsuits.
- The Registrant filed a Current Report on Form 8-K as of December 19,
1994, in which the Registrant reported the decisions by the Delaware
Chancery Court and the Federal District Court for the District of
Columbia that all issues of the two shareholder lawsuits had been
resolved by settlement and the orders of the two Courts that the
cases be dismissed.
- The Registrant filed a Current Report on Form 8-K on July 18, 1995,
in which the Registrant reported that it had signed a letter of
intent to acquire all of the stock of Automated Sciences Group, Inc.
- The Registrant filed a Current Report on Form 8-K on September 7,
1995, in which the Registrant reported that it had acquired all of
the stock of Automated Sciences Group, Inc.
<PAGE>
page 50
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on the 22nd day of
September, 1995.
CACI International Inc
By /s/
-----------------------------------
J. P. London
Chairman of the Board and President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ September 22, 1995
- ----------------------- ------------------
J. P. London Chairman of the Board,
President and Director
(Principal Executive Officer)
/s/ September 22, 1995
- ----------------------- ------------------
Samuel R. Strickland Executive Vice President, Chief
Financial Officer, and Treasurer
(Principal Financial and
Accounting Officer)
/s/ September 22, 1995
- ----------------------- ------------------
Paul J. Coleman, Jr. Director
/s/ September 22, 1995
- ----------------------- ------------------
Alan S. Parsow Director
/s/ September 22, 1995
- ----------------------- ------------------
Larry L. Pfirman Director
/s/ September 22, 1995
- ----------------------- ------------------
Warren R. Phillips Director
/s/ September 22, 1995
- ----------------------- ------------------
Charles P. Revoile Director
<PAGE>
page 51
/s/ September 22, 1995
- ----------------------- ------------------
William K. Sacks Director
/s/ September 22, 1995
- ----------------------- ------------------
John M. Toups Director
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM
10-K FOR FY95 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 1,996,000
<SECURITIES> 0
<RECEIVABLES> 54,226,000
<ALLOWANCES> (1,415,000)
<INVENTORY> 0
<CURRENT-ASSETS> 54,334,000
<PP&E> 22,453,000
<DEPRECIATION> (13,927,000)
<TOTAL-ASSETS> 74,642,000
<CURRENT-LIABILITIES> 27,817,000
<BONDS> 0
<COMMON> 1,357,000
0
0
<OTHER-SE> 43,128,000
<TOTAL-LIABILITY-AND-EQUITY> 74,642,000
<SALES> 0
<TOTAL-REVENUES> 232,964,000
<CGS> 0
<TOTAL-COSTS> 126,442,000
<OTHER-EXPENSES> 92,176,000
<LOSS-PROVISION> 493,000
<INTEREST-EXPENSE> 478,000
<INCOME-PRETAX> 13,375,000
<INCOME-TAX> 5,219,000
<INCOME-CONTINUING> 8,156,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,156,000
<EPS-PRIMARY> 0.77
<EPS-DILUTED> 0.77
</TABLE>
CACI INTERNATIONAL INC AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON
AND COMMON EQUIVALENT SHARE
<TABLE>
<CAPTION>
Year Ended June 30
-----------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Net Income before
extraordinary item $ 8,156,000 $ 6,336,000 $ 2,980,000
Extraordinary item 0 (300,000) 0
----------- ----------- -----------
Net Income $ 8,156,000 $ 6,036,000 $ 2,980,000
Average shares
outstanding during
the period 10,020,000 10,098,000 10,004,000
Dilutive effect of stock
options after
application of treasury
stock method 591,000 517,000 357,000
----------- ----------- -----------
Average number of shares
and equivalent shares
outstanding during
the period 10,611,000 10,615,000 10,361,000
----------- ----------- -----------
Earnings per common and
common equivalent share
Before extraordinary item $ 0.77 $ 0.60 $ 0.29
Extraordinary item $ 0.00 $ (0.03) $ 0.00
----------- ----------- -----------
Net Income $ 0.77 $ 0.57 $ 0.29
=========== =========== ===========
</TABLE>
Exhibit 21
SIGNIFICANT SUBSIDIARIES OF THE REGISTRANT
(as defined in Section 1-02(w) of Regulation S-X)
CACI, Inc., a Delaware Corporation
CACI, Inc.-Federal, a Delaware Corporation
CACI, Inc.-Commercial, a Delaware Corporation
CACI Products Company, a Delaware Corporation
American Legal Systems Corp., a Delaware Corporation
CACI Field Services, Inc., a Delaware Corporation
CACI, N.V., a Netherlands Corporation
CACI Limited, a U.K. Corporation
Exhibit 10.3
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the 17th day of August, 1995,
between CACI International Inc, a Delaware corporation
headquartered at 1100 North Glebe Road, Arlington, Virginia, and
Dr. J. P. London (the "Executive") residing at 1921 24th Street,
NW, Washington, DC 20008.
W I T N E S S E T H:
WHEREAS, Executive has been employed by CACI International Inc
("the Company") for a substantial length of time, and the
services of Executive, his managerial experience, and his
knowledge of the affairs of the Company are of great value to the
Company; and
WHEREAS, the Company deems it essential that it have the
advantage of the services of Executive for a fixed period of time
under the conditions set forth herein below;
NOW, THEREFORE, in consideration of the mutual promises herein
contained and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties agree in good faith as follows:
1. Executive Position and Scope. The Company hereby employs
Executive in a managerial capacity having the responsibility and
authority of President and Chief Executive Officer of the
Company, with powers and duties in accordance with the By-laws of
the Company and customary to such position in similarly situated
publicly-held companies, to be responsible for the general
management of all the affairs of the Company's worldwide
operations and those of all of its subsidiaries, and Executive
hereby accepts such employment. Executive's powers and authority
shall be superior to those of any other officer or employee of
the Company, or any subsidiary or affiliate of the Company.
During the period of such employment, Executive also agrees to
serve, if elected, as an officer and director of any subsidiary
or affiliate of the Company. Executive agrees, subject to his
annual election as such, to serve as a Director of the Company or
the Chairman of the Board of Directors, or both during his term
of employment hereunder.
2. Term. The initial term of this Agreement shall be for
one (1) year commencing on the date set forth above. This
Agreement shall automatically renew itself for an additional one
(1) year term on each anniversary of the commencement date of the
Agreement from year-to-year so long as the Agreement is in
effect, subject to termination upon any basis listed in
Paragraphs 5, 6, 7 or 9 herein.
<PAGE>
<page 2>
3. Compensation. Executive shall receive the following
compensation for his services during the term of employment
hereunder:
a) During the period of Executive's employment, the
Company shall pay to Executive a salary, the amount of which
shall be fixed by the Board of Directors of the Company from time
to time, provided that in no event shall Executive's salary be at
a rate less than $200,000 per year. Such compensation shall be
paid to Executive with the same frequency as other executives of
the Company are compensated. During the period of Executive's
employment hereunder, Executive's salary shall be reviewed at
least annually by the Compensation Committee of the Board of
Directors.
b) Executive shall be entitled to participate in any
bonus plan, incentive compensation plan, deferred compensation
plan, pension or profit-sharing plan, stock purchase or stock
option plan, savings plan, annuity or group insurance plan,
medical plan, and other non-severance related benefits maintained
by the Company for its executive officers.
c) The Company shall reimburse Executive in accordance
with the current expense reimbursement policies of the Company
for expenses incurred by Executive in the performance of
Executive's duties hereunder, including, but not limited to,
transportation, meals, accommodations, entertainment, and other
expenses (including business-related charitable contributions up
to an amount approved by the Compensation Committee for any given
year) incurred in connection with the business of the Company.
4. Business Duty and Location. During the period of
employment hereunder, and except for illness, reasonable vacation
periods, and reasonable leaves of absence, (vacations or leaves
of absences not to be of more than thirty (30) consecutive days
duration), Executive agrees to devote in good faith his full time
and best efforts, during reasonable business hours, to the
services which he is required to render to the Company hereunder,
and agrees to travel to the extent reasonably necessary to
perform such duties.
However, with the approval of the Board of Directors from
time to time, Executive may serve, or continue to serve, on the
board(s) of directors of, and hold any other offices or positions
in, companies or organizations, which, in the judgment of the
Board of Directors, will benefit the Company and will not present
any conflict of interest with the Company, or materially affect
the performance of Executive's duties.
The Company agrees that Executive's principal site of
<PAGE>
<page 3>
employment shall be at the principal office of the Company in the
Washington, D.C. metropolitan area, and that Executive shall not
be arbitrarily relocated outside of the Washington, D.C.
metropolitan area. Any relocation of Executive's principal site
of employment shall be effected, if at all, only after good faith
consultation and mutual agreement between the Company and
Executive.
In the event that Executive shall agree to relocate his
principal residence outside of the Washington, D.C. metropolitan
area by reason of the relocation of the principal office of the
Company, the Company shall defray all reasonable expenses
incurred by Executive in relocating the personal belongings of
Executive and the members of his family who reside with
Executive.
5. Disability. The Company shall have the right to
terminate this Agreement in the event of Executive's death, or in
the event that Executive shall be unable, or shall fail, to
perform services pursuant to this Agreement as a result of a
mental or physical incapacitating disability, and such failure or
incapacitating disability shall exist for any consecutive six (6)
month period. Executive shall not be deemed to have been
terminated for mental or physical disability unless and until
there has been delivered to Executive a copy of a resolution duly
adopted by a two-thirds (66 2/3%) majority vote of the entire
number of the non-management directors of the Company's Board of
Directors at a meeting of the Board called and held for the
purpose (after reasonable notice to Executive and an opportunity
for Executive and/or Executive's counsel to be heard before the
Board), finding that in the good faith opinion of the Board on
the basis of an opinion of a qualified physician mutually agreed
upon by the Company and Executive, Executive is unable to perform
the duties of his employment due to mental or physical disability
and specifying the particulars thereof in detail.
6. Cause. This Agreement may be terminated by the Company
for cause. For the purposes of this Agreement "Cause" shall be
defined as gross negligence, willful misconduct or fraud on the
part of Executive. Executive may be terminated for Cause only in
accordance with a resolution duly adopted by an absolute majority
of the entire number of the non-management directors of the
Company finding that, in the good faith opinion of the Board of
Directors, Executive engaged in conduct justifying a termination
for Cause as that term is defined above and specifying the
particulars of the conduct motivating the Board's decision to
terminate Executive for Cause. Such resolution may be adopted by
the Board only after the Board has provided to Executive (a)
advance written notice of a meeting of the Board called for the
purpose of determining Cause for termination of Executive, (b) a
statement setting forth the alleged grounds for termination, and
<PAGE>
<page 4>
(c) an opportunity for Executive and, if Executive so desires,
Executive's counsel to be heard before the Board.
7. Voluntary Separation. Except as specifically provided in
Paragraph 9, Executive shall have the right to terminate his
employment with the Company hereunder at any time by providing
six (6) months advance written notice to the Board of Directors
of the Company indicating Executive's desire to retire or to
resign from the Company's employment. Except as specifically
provided in Paragraph 9, in the event of Executive's voluntary
retirement or resignation, the Company shall not be obligated to
pay to Executive any termination or severance payment as
described in Paragraph 8 below.
8. Termination Payment. Except in connection with a Change
of Control Disposition as defined in Paragraph 9 below, if
Executive's employment or this Agreement with the Company is
terminated for any reason other than death, termination for Cause
as defined in Paragraph 6, or voluntary retirement or resignation
in Paragraph 7, then the Company shall pay to Executive an amount
equal to eighteen (18) months of Executive's "Current Base
Salary." Executive's "Current Base Salary" shall be deemed to be
the highest base salary paid to Executive at any time during the
thirty-six (36) months prior to termination of Executive's
employment.
9. Change of Control and Termination Payments. For purposes
of this Agreement, a "Change of Control Disposition" occurs
whenever there is a change in control of the Company. A change
in control of the Company shall be deemed to have occurred if (a)
there shall be consummated (i) any consolidation or merger of the
Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company's Common
Stock would be converted into cash, securities or other property,
other than a merger of the Company in which the distribution of
the common stock of the merged company immediately following the
merger is proportionately the same as was the distribution of the
common stock of the Company immediately before the merger, or
(ii) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or
substantially all, of the assets of the Company, or (b) the
stockholders of the Company shall approve any plan or proposal
for the liquidation or dissolution of the Company, or (c) any
person (as such term is used in Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), shall become the beneficial owner (within the meaning of
Rule 13d-3 under the Exchange Act) of 25% or more of the
Company's outstanding Common Stock, or (d) any change for any
reason (including without limitation any result of a tender
offer, proxy contest, merger or similar transaction) in the
composition of the Board of Directors of the Company resulting in
<PAGE>
<page 5>
a majority of the present directors of the Company (Messrs.
London, Coleman, Parsow, Pfirman, Phillips, Revoile, Sacks and
Toups) not constituting a majority, provided that in making such
determination, directors who were nominated or elected by a
majority of the present directors shall be considered as part of
the present majority. The "Change of Control Disposition Date"
shall be that calendar date on which a Change of Control
Disposition event is consummated and legally binding upon the
parties.
If, following a Change of Control Disposition of the
Company, Executive's employment is terminated within one (1) year
of the Change of Control Disposition Date (a) involuntarily for
any reason other than Executive's death or Cause or (b)
voluntarily by Executive for any reason, then the Company shall
pay to Executive an amount equal to thirty-six (36) months of
Executive's Current Base Salary, with Current Base Salary as
defined in Paragraph 8 above.
10. Payment of Other Compensation. In addition to any
payment due Executive pursuant to Paragraphs 8 or 9 above, at the
time of termination of Executive's employment for any reason
other than "Cause" as defined in Paragraph 6 above, Executive
shall be paid all other compensation and benefits, including
incentive compensation accrued or imputed, due to Executive on
the date of termination.
11. Election of Payment. Executive may elect to receive the
compensation payable in accordance with this Agreement in a lump
sum or in equal payments at equal intervals no more often than
semi-monthly over a period of Executive's choice not to exceed
thirty-six (36) months.
12. Confidentiality. Executive shall not disclose, publish,
or use for any purpose not directly related to the performance of
Executive's duties for the Company, or permit anyone else to
disclose, publish, or use any proprietary or confidential
information or trade secrets of the Company at any time during or
after his employment with the Company. This obligation shall
continue so long as such information remains legally protectable
as to persons receiving it in a confidential relationship.
Executive agrees to return to the Company all proprietary
material which he possesses on the date of termination of
Executive's active employment with the Company.
13. Non-Competition. For a period of nine (9) months
following termination of Executive's employment with the Company
for any reason other than death or "Cause", and provided that the
Company does not breach its obligations under this Agreement,
Executive shall not (1) directly or indirectly, sell, market, or
otherwise provide any client or previously identified prospective
<PAGE>
<page 6>
client of the Company, products or services similar to or in
competition with those sold or distributed by the Company, in any
geographic area in which the Company offers any such products or
services, or (2) participate directly or indirectly in the hiring
or soliciting for employment of any person employed by the
Company.
14. Assignment. By reason of the special and unique nature
of the services hereunder, it is agreed that neither party hereto
may assign any interest, rights or duties which it or he may have
in this Agreement without the prior written consent of the other
party, except that upon any Change of Control Disposition as
defined above in Paragraph 9, this Agreement shall inure to the
benefit of and be binding upon Executive and the purchasing,
surviving or resulting person, company or entity in the same
manner and to the same extent as though such entity were the
Company.
The Company shall require any successor or assignee (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Company, by agreement in form and substance
satisfactory to Executive, expressly, absolutely and
unconditionally to assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be
required to perform it if no such succession or assignment had
taken place. Any failure by the Company to obtain such agreement
prior to the effectiveness of any such succession or assignment
shall be a material breach of this Agreement and shall entitle
Executive to immediate payment of the severance compensation
described in Paragraph 9 above.
15. Claim Resolution. Any controversy or claim arising out
of or relating to this Agreement, or its breach, or otherwise
arising out of or relating to Executive's employment (including
without limitation to any claim of discrimination whether based
on race, color, religion, national origin, gender, age, sexual
preference, disability, status as a disabled or Vietnam-era
veteran, or any other legally protected status, and whether based
on federal or State law, or otherwise) by the Company shall be
resolved by arbitration. This arbitration shall be held in the
jurisdiction appropriate to the principal location of the Company
(currently Arlington, Virginia) in accordance with the model
employment arbitration procedures of the American Arbitration
Association. Judgment upon award rendered by the arbitrator
shall be binding upon both parties and may be entered and
enforced in any court of competent jurisdiction. The above
notwithstanding, nothing in this Paragraph 15 shall be deemed a
waiver of any of the Executive's or the Company's rights or
entitlements under law.
<PAGE>
<page 7>
16. Executive Estate. This Agreement shall inure to the
benefit of and be enforceable by Executive's personal and legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If Executive should die
while any amounts are still payable to him hereunder, all such
amounts shall be paid in accordance with the terms of this
Agreement to Executive's devisee, legatee, or other designee or,
if there be no such designee, to Executive's estate.
17. Amendments. No provision of this Agreement may be
amended, modified, waived or discharged unless such amendment,
waiver, modification or discharge is agreed to in a writing
signed by Executive and the Company. No waiver by either party
of any breach or failure to comply with any condition or
provision of this Agreement by the other party at any time shall
be deemed a waiver of any other breach or failure to comply with
the conditions or provisions of this Agreement. No agreements or
representations, oral or otherwise, expressed or implied,
concerning the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. This
Agreement shall be construed and enforced in accordance with the
laws of the Commonwealth of Virginia.
18. Notices. For purposes of this Agreement, notices and all
other communications provided for in this Agreement shall be in
writing and shall be deemed to have been duly given when
delivered or mailed by United States registered mail, return
receipt registered, postage prepaid, as follows:
If to the Company:
1100 N. Glebe Road
16th Floor
Arlington, Virginia 22201
Attention: General Counsel
If to the Executive:
1921 24th Street, NW
Washington, D.C. 20008
or such other address as either party may have furnished to the
other in writing in accordance herewith, except that notices of
change of address shall be effective only upon receipt.
19. Enforceability. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
20. Counterparts. This Agreement may be executed in one or
<PAGE>
<page 8>
more counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the
same instrument.
21. Legal Fees. The Company shall pay any reasonable legal
fees and expenses including those of experts and witnesses which
Executive may incur in connection with any dispute or proceeding
brought to interpret or enforce this Agreement.
22. Headings. The headings of numbered Paragraphs in this
Agreement have been included for convenience only and in no way
define or limit the scope, content or substance of this
Agreement, nor in any way affect its provisions or obligations.
23. Entire Agreement. This Agreement constitutes the entire
understanding and agreement between the Company and Executive
with regard to all matters herein. It supersedes and replaces
any and all prior agreements written or oral between the Company
and Executive concerning Executive's employment, including the
Executive's Employment Agreement dated July 1, 1990, except that
the Executive's Agreement for Life Time Medical Benefits with the
Company dated August 17, 1995, is not effected in any way
hereunder, and remains in full force and effect as a separate
agreement between the Executive and the Company.
24. Initials. Each page of this Agreement shall be initialed
and dated by the Executive and that official signing for and on
behalf of the Company.
In witness whereof the parties have executed this Agreement to be
effective the day and year first above written.
CACI International Inc Executive
By: /s/ By: /s/
----------------------- -----------------------
- -
Jeffrey P. Elefante J.P. London
I, Arnold D. Morse, certify that I am the Assistant Secretary of
CACI International Inc; that Jeffrey P. Elefante, who signed this
Agreement for this Corporation, was then Senior Vice President,
General Counsel and Secretary of this Corporation; and that this
Agreement was duly signed for and on behalf of this Corporation
by authority of its governing body and within the scope of its
corporate powers.
<PAGE>
<page 9>
Witness my hand and the seal of this Corporation this 17th day of
August, 1995.
/s/
- --------------------------
Arnold D. Morse
Assistant General Counsel, Staff Director &
Assistant Secretary
CERTIFICATE OF INCORPORATION
of
CACI International Inc 1/
THE UNDERSIGNED INCORPORATOR(S), in order to form a corporation for
the purposes hereinafter stated, under and pursuant to the
provisions of the General Corporation Law of the State of Delaware,
do hereby certify as follows:
FIRST: The name of the corporation is CACI International Inc 1/
SECOND: The registered office of the corporation is to be located
at 306 South State Street, in the City of Dover in the County of
Kent, in the State of Delaware, 19901. The name of its registered
agent at the address is the United States Corporation Company.
THIRD: The objects and purposes of the corporation are to engage
in any lawful business and activity for which a corporation may be
organized under the General Corporation Law of Delaware, including:
The corporation shall have the power to do any and all acts and
things necessary or useful to its business and purposes, and shall
have the general, specific and incidental powers and privileges
granted to it by statute, including:
To enter into and perform contracts; to acquire and exploit
patents, trademarks, rights of all kinds and related and other
interests; to acquire, use, deal in and with, encumber and dispose
of real and personal property without limitation including
obligations and/or securities; to borrow and lend money for its
corporate purposes; to invest and reinvest its funds, and take,
hold and deal with real and personal property as security for the
payment of funds loaned or invested, or otherwise; to vary any
investment or employment of capital of the corporation from time to
time; to create and/or participate with other corporations and
entities for the performance of all undertakings, as partner, joint
venturer, or otherwise, and to share or delegate control therewith
or thereto.
To pay pensions and establish and carry out pension, profit
sharing, stock option, stock purchase, stock bonus, retirement,
benefit, incentive or commission plans, trust and provisions for
any or all of its directors, officers and employees, and for any or
all of the directors, officers and employees of its subsidiaries;
and to provide insurance for its benefit on the life of any of its
directors, officers or employees, or on the life of a stockholder
for the purpose of acquiring at his death shares of its stock owned
by such stockholder.
To invest in and merge or consolidate with any corporation in such
manner as may be permitted by law; to aid in any manner any
corporation whose stocks, bonds or other obligations are held or in
any manner guaranteed by this corporation, or in which this
corporation is in any way interested; to do any other acts or
things for the preservation, protection, improvement or enhancement
of the value of any such stock, bonds or other securities; and
while owner of any such stock, bonds or other securities to
exercise all the rights, powers and privileges of ownership
thereof, and to exercise any and all voting powers thereon; and to
guarantee the indebtedness of others and the payment of dividends
upon any stock, the principal or interest or both of any bonds or
other securities, and the performance of any contracts.
To do all and everything necessary, suitable and proper for the
accomplishment of any of the purposes or the attainment of any of
the objects or the furtherance of any of the powers hereinbefore
set forth, either alone or in association with other corporations,
firms, partnerships or individuals, and to do every other act and
thing incidental or appurtenant to or growing out of or connected
with the aforesaid business or powers or any part or parts thereof,
to the extent permitted by the laws of Delaware under which this
corporation is organized, and to do all such acts and things and
conduct business and have one or more offices and exercise its
corporate powers in any and all places, without limitation.
FOURTH: /2 The total number of shares of all classes which the
corporation shall have the authority to issue is Ninety Million
(90,000,000), consisting of Forty Million (40,000,000) shares of
Class A Common Stock of the par value of $0.10 per share
(hereinafter called "Class A Common Stock"), Forty Million
(40,000,000) shares of Class B Common Stock of the par value of
$0.10 per share (hereinafter called "Class B Common Stock"), and
Ten Million (10,000,000) shares of preferred stock (hereinafter
called "Preferred Stock") of the par value of $0.10 per share.
The Board of Directors is authorized, subject to limitations
prescribed by law and the provisions of this Article FOURTH, to
provide for the issuance of the shares of Preferred Stock in
series, and by filing a certificate pursuant to the applicable law
of the State of Delaware, to establish from time to time the number
of shares to be included in each such series, and to fix the
designation, powers, preferences and rights of the shares of each
series and the qualifications, limitations or restrictions thereof.
The authority of the Board with respect to each series shall
include, but not be limited to, determination of the following:
(a) The number of shares constituting that series and the
distinctive
designation of that series;
(b) The dividend rate on the shares of that series, whether
dividends shall be cumulative, and, if so, from which date or
dates, and the relative rights of priority, if any, of payment of
dividends on shares of that series;
(c) Whether that series shall have voting rights, in addition
to the voting rights provided by law, and, if so, the terms of such
voting rights;
(d) Whether that series shall have conversion privileges, and,
if the terms and conditions of such conversion, including provision
for adjustment of the conversion rate in such events as the Board
of Directors shall determine;
(e) Whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions of such
redemption, including the date or dates upon or after which they
shall be redeemable, and the amount per share payable in case of
redemption, which amount may vary under different conditions and at
different redemption dates;
(f) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so, the
terms and amount of such sinking fund;
(g) The rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up of
the corporation, and the relative rights of priority, if any, of
payment of shares of that series;
(h) Any other relative rights, preferences and limitations of
that series.
Dividends on outstanding shares of Preferred Stock shall be paid or
declared and set apart for payment before any dividends shall be
paid or declared and set apart for payment on the common shares
with respect to the same dividend period.
If upon voluntary or involuntary liquidation, dissolution or
winding up of the corporation, the assets available for
distribution to holders of shares of Preferred Stock of all series
shall be insufficient to pay such holders the full preferential
amount to which they are entitled, then such assets shall be
distributed ratably among the shares of all series of Preferred
Stock in accordance with the respective preferential amounts
(including unpaid cumulative dividends, if any) payable with
respect thereto.
The powers, preferences and rights, and the qualifications,
limitation and restrictions thereof, of each class of common stock,
are as follows:
1. Voting
(a) While any shares of Class B Common Stock are issued and
outstanding, and subject to the provisions of the following
paragraph (b), at every meeting of the stockholders every holder of
Class A Common Stock shall be entitled to one (1) vote in person or
by proxy for each share of Class A Common Stock standing in his
name on the stock transfer records of the corporation, and every
holder of Class B Common Stock shall be entitled to ten (10) votes
in person or by proxy for each share of Class B Common Stock
standing in his name on the stock transfer records of the
corporation, provided that at every meeting of the stockholders
called for the election of directors the holders of Class A Common
Stock, voting separately as a class, shall be entitled to elect
one-quarter (1/4) of the number of directors to be elected at such
meeting. If one-quarter (1/4) of such number of directors is not
a whole number, then the holders of Class A Common Stock, voting
separately as a class, shall be entitled to elect the next higher
whole number of directors to be elected at such meeting. The
holders of Class B Common Stock voting as a class shall be entitled
to elect the remaining number of directors constituting the full
board. Directors elected by the holders of a Class of Common
Stock, voting separately as a class, may be removed, with or
without cause, only by a vote of the holders of a majority of the
shares of such Class of Common Stock then outstanding, voting
separately as a class. If, during the interval between annual
meetings of stockholders for the election of directors, the number
of directors who have been elected by the holders of either Class
of Common Stock voting separately as a class shall, by reason of
resignation, death or removal, be reduced, the vacancy or vacancies
in the directors elected by the holders of such Class of Common
Stock voting separately as a class shall be filled by a majority
vote of the remaining directors representing such Class then in
office, even if less than a quorum, and if not so filled within
forty (40) days after the creation of such vacancy or vacancies,
the Secretary of the corporation shall call a special meeting of
the holders of such Class of Common Stock and such vacancy or
vacancies shall be filled at such special meeting. Any director
elected to fill any such vacancy by the remaining directors then in
office may be removed from office by vote of the holders of a
majority of the shares of the represented Class of Common Stock
then outstanding, voting separately as a class.
(b) If, while any shares of Class B Common Stock are issued and
outstanding, Herbert W. Karr shall cease to be a holder of Class B
Common Stock, or if any "Conversion Event", as defined in
subparagraph (c) of paragraph 4 below, shall occur as to Herbert W.
Karr, then and in any such event (a "Change-over Event"), the
number of directors which may be elected by each Class of Common
Stock shall be adjusted as follows:
(i) Prior to the first annual meeting of stockholders
following the first anniversary of the Changeover Event (the
"Second Annual Meeting"), the holders of Class A Common Stock and
Class B Common Stock shall be entitled to elect directors as
provided in the preceding paragraph (a).
(ii) Commencing with the Second Annual Meeting, and prior
to the annual meeting following the second anniversary of the
Change-over Event (the "Third Annual Meeting"), the holders of
Class B Common Stock shall be entitled to elect the largest whole
number of directors which is equal to or less than five-eighths
(5/8) of the full Board, and the holders of Class A Common Stock
shall be entitled to elect the remaining directors.
(iii) Commencing with the Third Annual Meeting, and prior
to the Conversion Date (defined hereinafter), the holders of Class
B Common Stock shall be entitled to elect the largest whole number
of directors which is equal to or less than one-half (1/2) of the
full Board, and the holders of Class A Common Stock shall be
entitled to elect the remaining directors.
(iv) At the close of business on the date (the
"Conversion Date") that is sixty-one (61) days prior to the date on
which the annual meeting following the third anniversary of the
Changeover Event would be held in accordance with the certificate
of incorporation and the by-laws of the corporation, all issued and
outstanding shares of Class B Common Stock, and all shares of Class
B Common Stock held in treasury, shall be deemed to be converted
into an equal number of shares of Class A Common Stock, immediately
and without further action; and thereafter no share of Class B
Common Stock shall be issued. Commencing on the Conversion Date
and continuing thereafter, the holders of Class A Common Stock
shall be entitled to elect all the directors of the corporation as
provided in subparagraph (d) of this paragraph 1.
(c) At any time when the number of issued and outstanding
shares of Class A Common Stock is less than 10% of the aggregate
number of issued and outstanding shares of Common Stock of both
Class A and Class B, then the provisions of the preceding
paragraphs (a) and (b) shall not be applicable to the election of
directors, and all holders of Common Stock of Class A and Class B
shall be entitled to vote as a single class for the election of
directors, with each share of Common Stock of either class having
one (1) vote. Directors elected by the holders of both Classes of
Common Stock may be removed, with or without cause, only by a vote
of the holders of a majority of both Classes of Common Stock voting
together as a single class.
(d) If and whenever there are no shares of Class B Common Stock
issued and outstanding, every holder of Class A Common Stock shall
be entitled to one (1) vote on all matters, including the election
of directors, for each share of Class A Common stock standing in
his name on the stock transfer records of the corporation.
(e) Every reference in this certificate of incorporation to a
majority or other proportion of shares of stock shall refer to such
majority or other proportion of the votes of such shares of stock
of any applicable class.
2. Dividends
(a) No cash dividend shall be declared or paid with respect to
shares of Class B Common Stock unless a cash dividend with respect
to Class A Common Stock, equal in amount per share to one hundred
ten per cent (110%) of the amount per share declared with respect
to the Class B Common Stock, is declared and paid for the same
dividend period.
(b) In the event of any stock split, stock dividend or similar
adjustment to either Class of Common Stock, the voting rights and
dividend preferences of such Class shall be proportionately
adjusted to maintain the voting rights and dividend rights of the
two Classes of Common Stock in the same proportions as they existed
immediately prior to said adjustment; provided, no such
proportionate adjustment shall be made on account of the 30% stock
dividend (the "Exchange Offer Dividend") described in the Form S-4
registration statement of the corporation filed with the Securities
and Exchange Commission in October 1985.
(c) In the event of any stock split, stock dividend (other than
the Exchange Offer Dividend) or similar adjustment to either Class
of Common Stock, the Offer Price (as defined in subparagraph (b) of
paragraph 4) and the conversion ratio for the conversion of Class
B Common Stock into Class A Common Stock shall be equitably
adjusted by the Board of Directors.
3. Restrictions on Transfer
(a) No person holding shares of Class B Common Stock
(hereinafter called a "Class B Holder") may transfer, and the
corporation shall not register the transfer of such shares of Class
B Common Stock, whether by sale, assignment, gift, bequest,
appointment or otherwise, except to a Permitted Transferee of such
Class B Holder, which term shall have the following meanings:
(i) Except as provided in the following clause (ii),
"Permitted Transferee" shall mean only a person who, immediately
before the registration of any such Transfer, is a holder of record
of one or more shares of Class B Common Stock.
(ii) With respect to shares of Class B Common Stock which
are the subject of the Shareholders' Agreement dated as of December
1, 1985 among the corporation, Herbert W. Karr ("Karr"), J.P.
London ("London"), and certain other holders of Class B Common
Stock (the "Shareholders' Agreement"), "Permitted Transferee" shall
mean a person to whom, in the opinion of counsel to the
corporation, shares of Class B Common Stock may be transferred in
conformity with the provisions of the Shareholders' Agreement.
(b) Notwithstanding anything to the contrary set forth herein,
any Class B Holder may pledge such Holder's shares of Class B
Common Stock to a pledgee pursuant to a bona fide pledge of such
shares as collateral security for indebtedness due to the pledgee,
provided that such shares shall not be transferred to or registered
in the name of the pledgee and shall remain subject to the
provisions of this paragraph 3. In the event of foreclosure or
other similar action by the pledgee, or the transfer, pursuant to
an attachment, lien or similar process, of Class B Common Stock to
a bona fide creditor of any Class B Holder in satisfaction of an
obligation owed to said creditor, such shares of Class B Common
Stock must, as soon as reasonably practicable, be either (i)
transferred to a Permitted Transferee of the pledger or creditor or
(ii) converted into shares of Class A Common Stock, as the pledgee
or creditor may elect, in accordance with the restrictions on
transfer and conversion as stated herein.
(c) Any purported transfer of shares of Class B Common Stock
not permitted hereunder shall be void and of no effect, and the
purported transferee shall have no rights as a stockholder of the
corporation and no other rights against or with respect to the
corporation. The corporation may, as a condition to the transfer
or the registration of transfer of shares of Class B Common Stock
to a purported Permitted Transferee, require the furnishing of such
affidavits or other proof as it deems necessary to establish that
such transferee is a Permitted Transferee. The corporation may
note on the certificates for shares of Class B Common Stock the
restrictions on transfer and registration of transfer set forth in
this paragraph 3.
4. Conversion of Class B to Class A
(a) Each share of Class B Common Stock may at any time be
converted into one (1) fully paid and nonassessable share of Class
A Common Stock subject to the provisions of this paragraph 4. Such
right shall be exercised by the surrender to the corporation of the
certificate representing such share of Class B Common Stock to be
converted, at any time during normal business hours at the
principal executive offices of the corporation, or if an agent for
the registration of transfer of shares of Class B Common Stock is
then duly appointed and acting (said agent being hereinafter called
the "Transfer Agent") then at the office of the Transfer Agent,
accompanied by (i) a written notice of the election by the holder
thereof to convert, (ii) evidence satisfactory to the corporation's
counsel of compliance with the provisions of the following
paragraph (b), and (iii) (if so required by the corporation or the
Transfer Agent) instruments of transfer in form satisfactory to the
corporation and to the Transfer Agent, duly executed by such holder
or his duly authorized attorney, and transfer tax stamps or funds
therefor, if required pursuant to subparagraph (i) below.
(b) No share of Class B Common Stock shall be converted to
Class A Common Stock unless the holder thereof has first offered to
sell that share to the other Class B Holders and to the
corporation, as follows:
(i) The Class B Holder wishing to convert (the "Converting
Holder") shall give to the Secretary of the corporation a written
notice (the "Notice") to that effect, which Notice shall be deemed
to constitute an offer to sell, to the Offerees, at the Offer Price
and upon the terms and conditions hereinafter set forth, the Class
B shares that the Converting Holder proposes to convert (the
"Offered Shares"). As promptly as practicable after the date on
which he receives the Notice (the "Date of Receipt"), and in any
event not more than five (5) days after the Date of Receipt, the
Secretary shall (x) establish a record date not more than sixty
(60) days prior to the Date of Receipt for purposes of determining
the record holders of Class B Common Stock entitled to purchase
their pro rata portion of the Offered Shares (the "Offerers"), and
(y) give written notice simultaneously to all Offerees, informing
each Offeree of the Converting Holder's offer to sell to that
Offeree a pro rata portion of the Offered Shares, at an "Offer
Price" per share equal to the mean between the high and low prices
(or, if applicable, the mean between the closing bid and asked
prices) for Class A Common Stock, as reported by NASDAQ or by any
national securities exchange on which the Class A Common Stock is
listed, on the business day immediately preceding the Date of
Receipt. Simultaneous notice shall be deemed to have been given to
all Offerees on the date (the "Offer Date") on which the Secretary
sends to all Offerees, by delivery in hand or by deposit in the
United States mail, registered or certified and postage prepaid,
addressed to each Offeree at that Offeree's address appearing in
the corporation's stock records as of the applicable record date,
written notice as aforesaid. For purposes of this paragraph (b),
the pro rata portion of Offered Shares to be offered to each
Offeree shall be determined by the proportion that the amount of
shares held of record by that Offeree as of the applicable record
date bears to the aggregate amount of shares held of record by all
Offerees as of that record date; provided, that the Secretary may
apply rounding to avoid offering fractional shares.
(ii) Each Offeree may elect to purchase any or all of the
shares offered to him by giving written notice thereof to the
Secretary and the Converting Holder within fifteen (15) days after
the Offer Date. Any shares so purchased shall be delivered against
tender of the Offer Price in cash, certified or bank check, or wire
transfer within seven (7) days after the giving of notice by the
Offeree.
(iii) Commencing on the sixteenth (16th) day after the
Offer Date, and continuing for fifteen (15) days until and
including the thirtieth day after the Offer Date, the Notice given
by the Converting Holder pursuant to the preceding clause (i) shall
be deemed to constitute an offer to sell to the corporation at the
Offer Price any and all of the Offered Shares that have been
offered to but not accepted by the Offerees. The corporation may
elect to purchase any or all of the Offered Shares within the
fifteen (15) days described in the immediately preceding sentence.
(iv) Any shares of Class B Common Stock which have been
offered to and have not been purchased by the Offerees and the
Company, as provided in the preceding clauses (i)-(iii), shall be
converted to shares of Class A Common Stock.
(c) Except as provided in clause (ii) of this paragraph (c),
upon the occurrence of a Conversion Event, as defined in clause (i)
of this paragraph (c), any and all shares of Class B Common Stock
held by the shareholder as to whom the Conversion Event occurs
shall be converted immediately and without further action into an
equal number of shares of Class A Common Stock. Thereafter, any
outstanding certificate representing any shares of Class B Common
Stock so converted shall represent the corresponding shares of
Class A Common Stock; and any holder of any such certificate shall
be entitled to surrender it for issue of a certificate or
certificates for shares of Class A Common Stock as provided in
subparagraph (f) of this paragraph 4.
(i) A "Conversion Event" shall mean, as to any holder of
Class B Common Stock, his death, or his permanent mental
incapacity, or his being adjudged bankrupt, or the appointment of
any receiver, agent, or other custodian of all or any part of his
property that may include Class B Common Stock under any insolvency
or similar law of any jurisdiction.
(ii) A Conversion Event shall not result in automatic
conversion of any shares under this paragraph (c) if, before the
occurrence of the Conversion Event, the affected shareholder had
entered into a binding agreement to sell those shares (including a
binding option to sell) to any Permitted Transferee, as defined in
paragraph 3 of this Article FOURTH; provided, however, that if the
sale is not consummated within sixty (60) days after the Conversion
Event, then the shares shall be automatically converted as provided
in this paragraph (c).
(d) If and whenever the aggregate amount of shares of Class B
Common Stock held of record by Karr and London, plus the number of
shares of Class B Common Stock which Karr or London has a present
or future right to acquire pursuant to a binding agreement, is less
than twenty-five percent (25%) of the total amount of issued and
outstanding Class B Common Stock, plus the number of shares of
Class B Common Stock which Karr or London has a present or future
right to acquire pursuant to a binding agreement, then all issued
and outstanding shares of Class B Common Stock, and all shares of
Class B Common Stock held in treasury, shall be deemed to be
converted into an equal number of shares of Class A Common Stock,
immediately and without further action; and thereafter no share of
Class B Common Stock shall be issued.
(e) The Board of Directors may at any time declare that each
issued and outstanding share of Class B Common Stock is converted
into 1.3 shares of Class A Common Stock, immediately and without
further action, if the Board determines that such action is in the
best interest of the stockholders generally. Without limiting the
generality of the foregoing, the Board may do so if it determines
that the existence of classes of shares with unequal voting power
substantially impairs the maintenance of a public market for shares
of Class A Common Stock. The Board may make reasonable provision
to avoid conversion into fractional shares, including without
limitation provision for rounding of conversion amounts, or for
payment of cash in lieu of fractional shares.
(f) As promptly as practicable after the surrender for
conversion of a certificate representing shares of Class B Common
Stock, the corporation will deliver or cause to be delivered at the
office of the Transfer Agent to or upon the written order of the
holder of such certificate, a certificate or certificates
representing the number of full shares of Class A Common Stock
issuable upon such conversion, issued in such name or names as such
holder may direct. Such conversion shall be deemed to have been
made immediately prior to the close of business on the date of the
surrender of the certificate representing shares of Class B Common
Stock, and all rights of the holder of such shares as such holder
shall cease at such time and the person or persons in whose name or
names the certificate or certificates representing the shares of
Class A Common Stock are to be issued shall be treated for all
purposes as having become the record holder or holders of such
shares of Class A Common Stock at such time; provided, however,
that any such surrender and payment on any date when the stock
transfer books of the corporation shall be closed shall constitute
the person or persons in whose name or names the certificate or
certificates representing shares of Class A Common Stock are to be
issued as the record holder or holders thereof for all purposes
immediately prior to the close of business on the next succeeding
day on which such stock transfer books are open.
(g) No adjustments in respect of dividends shall be made upon
the conversion of any share of Class B Common Stock; provided,
however, that if a share shall be converted subsequent to the
record date for the payment of a dividend or other distribution on
shares of Class B Common Stock but prior to such payment, the
registered holder of such share at the close of business on such
record date shall be entitled to receive the dividend or other
distribution payable on such share on the payment date
notwithstanding the conversion thereof or the corporation's default
in payment of the dividend due on the payment date.
(h) The corporation covenants that it will at all times reserve
and keep available, solely for the purpose of issue upon conversion
of the outstanding shares of Class B Common Stock, such number of
shares of Class A Common Stock as shall be issuable upon the
conversion of all such outstanding shares; provided, that nothing
contained herein shall be construed to preclude the corporation
from satisfying its obligations in respect of the conversion of the
outstanding shares of Class B Common Stock by delivery of purchased
shares of Class A Common Stock which are held in the treasury of
the corporation. The corporation covenants that if any shares of
Class A Common Stock, required to be reserved for purposes of
conversion hereunder, require registration with or approval of any
governmental authority under any federal or state law before such
shares of Common Stock may be issued upon conversion the
corporation will cause such shares to be duly registered or
approved, as the case may be. The corporation will endeavor to
list the shares of Class A Common Stock required to be delivered
upon conversion prior to such delivery upon each national
securities exchange, if any, upon which the outstanding Class A
Common Stock is listed at the time of such delivery. The
corporation covenants that all shares of Class A Common Stock which
shall be issued upon conversion of the shares of Class B Common
Stock will, upon issue, be fully paid and nonassessable and not
subject to any preemptive rights.
(i) The issuance of certificates for shares of Class A Common
Stock upon conversion of shares of Class B Common Stock, shall be
made without charge for any stamp or other similar tax in respect
of such issuance. However, if any such certificate is to be issued
in a name other than that of the holder of the share or shares of
Class B Common Stock converted, the person or persons requesting
the issuance thereof shall pay to the corporation the any tax which
may be payable in respect of any transfer involved in such issuance
or shall establish to the satisfaction of the corporation that such
tax has been paid.
5. Further Issue
(a) Except as otherwise provided in this paragraph 5, the
directors may at any time and from time to time issue shares of
authorized and unissued Class A Common Stock and Class B Common
Stock upon such terms and for such lawful consideration as they may
determine.
(b) If any Change-over Event (as defined in subparagraph (b) of
paragraph 1 above) shall occur, then and thereafter no share of
Class B Common Stock shall be issued except pursuant to the
conversion or exercise, as the case may be, of convertible
securities, options, warrants or other rights to acquire such
shares that were outstanding or in existence on the date of the
Change-over Event.
(c) After the completion of the contemplated exchange offer
described in the Form S-4 registration statement of the corporation
filed with the Securities and Exchange Commission in October 1985,
no share of authorized and unissued Class B Common Stock, no
security convertible into or exchangeable for shares of Class B
Common Stock, and no option, warrant or other right to subscribe
for, purchase or otherwise acquire shares of Class B Common Stock
shall be issued except with the approval of the holders of a
majority of the issued and outstanding shares of Class B Common
Stock, voting as a class. The issuance of Class B Common Stock
pursuant to the conversion or exercise of convertible securities,
options, warrants or other rights previously approved in accordance
with the preceding sentence shall not require additional approval
at the time of such conversion or exercise.
(d) After the completion of the contemplated exchange offer
described in the Form S-4 registration statement of the corporation
filed with the Securities and Exchange Commission in October 1985,
no more than five million (5,000,000) shares of authorized and
unissued Class B Common Stock shall be issued except with the
approval of the holders of a majority of the issued and outstanding
shares of Class A Common Stock, voting as a class; provided,
however, that the following shares of Class B Common Stock shall
not be included in the limitation provided in this paragraph (d):
(i) previously issued and reacquired shares sold by the
Company from treasury shares;
(ii) shares issued and sold in exchange for a like number
of shares of Class A Common Stock or issued and sold for a
consideration per share not less than the fair market value of
Class A Common Stock, determined as the mean between the high and
low prices (or, if applicable, the mean between the closing bid and
asked prices) for Class A Common Stock, as reported by NASDAQ or by
any national securities exchange on which Class A Common Stock is
listed, on the business day of the issuance;
(iii) shares issued in connection with a stock split,
stock dividend, or other similar pro rata distribution made on
substantially equivalent terms to holders of Class A Common Stock
and holders of Class B Common Stock; and
(iv) shares issued pursuant to the terms of an employee
stock incentive plan or similar employee benefit plan of the
corporation.
6. No Preemptive Rights. No stockholder of the corporation
shall be entitled as of right to subscribe for, purchase, or take
any part of any new or additional issue of stock of any class.
7. Liquidation. Except as otherwise provided in this Article
FOURTH, shares of Common Stock of Class A and Class B shall be
equal in right. Without limiting the generality of the foregoing,
all shares of Common Stock of Class A and Class B shall be entitled
to share equally and ratably in the proceeds of any liquidation of
the corporation.
FIFTH: The corporation is to have perpetual existence.
SIXTH: The private property of the stockholders shall not be
subject to the payment of corporate debts to any extent whatever
and they shall not be personally liable for the payment of the
corporation's debts except as they may be liable by reason of their
own conduct or acts.
SEVENTH: The following provisions are inserted for the management
of the business and for the conduct of the affairs the corporation,
and for further definition, limitation and regulation of the powers
of the corporation and of its directors and stockholders.
(1) The number of directors comprising the Board of Directors
of the corporation shall be such as from time to time shall be
fixed by or in the manner provided in the by-laws, but shall not be
less than five (5). Election of directors need not be by ballot
unless the by-laws so provide.
(2) The Board of Directors shall have the power, unless and to
the extent that the Board may from time to time by Resolution
relinquish or modify the power, without the assent or vote of the
stockholders:
(a) To make, alter, amend, change, add to, or repeal the
by-laws of the corporation, except any by-law which pursuant to law
or the by-laws of the corporation is required to be adopted,
amended or repealed by the stockholders; to fix and vary the amount
of capital of the corporation to be reserved for any proper
purpose; to authorize and cause to be executed mortgages and liens
upon all or any part of the property of the corporation; to
determine the use and disposition of any surplus or net profits;
and to fix the times for the declaration and payments of dividends,
and
(b) To determine from time to time whether, and to what
extent, and at what times and places, and under what conditions and
regulations, the accounts and books of the corporation (other than
the stock ledger) or any of them shall be open to the inspection of
the stockholders.
(3) The Board of Directors in its discretion may submit any
contract or act for approval or ratification at any annual meeting
of the stockholders or at any meeting of the stockholders called
for the purpose of considering such act or contract, and any
contract or act that shall be approved or be ratified by the vote
of the holders of a majority of the stock of the corporation which
is represented in person or by proxy at such meeting and entitled
to vote thereat (provided that a lawful quorum of stockholders be
there represented in person or by proxy) shall be as valid and
binding upon the corporation and upon all stockholders as though it
had been approved or ratified by every stockholder of the
corporation, whether or not the contract or act would otherwise be
open to legal attack because of directors' interest, or for any
other reason.
(4) No contract or transaction between this corporation an one
or more of its directors or officers, or between this corporation
and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are
directors or officers, or have a financial interest, shall be void
or voidable solely for this reason or solely because the director
or officer is present at or participates in the meeting of the
board of committee thereon which authorizes the contract or
transaction, or solely because his or their votes are counted for
such purpose, if the contract or transaction is fair as to the
corporation and/or if the material facts relating thereto are
disclosed to and/or known by the directors and/or stockholders
and/or approved thereby, pursuant to Section 144 of Title 8 of the
Delaware Code.
(5) In addition to the powers and authorities hereinbefore or
by statute expressly conferred upon them, the Board of Directors is
hereby empowered to exercise all such powers and to do all such
acts and things as may be exercised or done by the corporation;
subject, nevertheless, to the provisions of the statutes of
Delaware, of this certificate, and to any by-laws from time to time
made by the stockholders; provided, however, that no by-law so made
shall invalidate any prior act of the Board which would have been
valid if such by-law had not been made.
3/ (6) No director of the Board of Directors of the corporation
shall be held liable for the monetary damages for breach of
fiduciary duty while acting as a director on behalf of the
corporation, except for:
1. Breach of the director's duty of loyalty to the
corporation or its stockholders;
2. Acts or omissions not committed in good faith;
3. Acts or omissions which involve intentional misconduct
or a knowing violation of law;
4. Acts taken in violation of Section 174 of Title 8,
Delaware Code, as amended from time to time (dealing with the
distribution of dividends and stock repurchases); or
5. Transactions from which the director derived an
improper personal benefit.
3/ EIGHTH: The corporation may, to the full extent permitted by
Section 145 of the Delaware General Corporation Law, as amended
from time to time, indemnify or advance the expenses of all persons
whom it may indemnify or for whom it may advance expenses.
NINTH: Whenever a compromise or arrangement is proposed between
this corporation and its creditors or any class of them and/or
between this corporation and its stockholders or any class of them,
any court of equitable jurisdiction within the State of Delaware
may, on the application in a summary way of this corporation or of
any receiver or receivers appointed for this corporation under the
provisions of Section 291 of Title 8 of the Delaware Code or on
the application of trustees in dissolution or of any receiver or
receivers appointed for this corporation under the provisions of
Section 279 of Title 8 of the Delaware Code order a meeting of the
creditors or class of creditors, and/or of the stockholders or
class of stockholders of this corporation, as the case may be, to
be summoned in such manner as the said court directs. If a majority
in number representing three-fourths in value of the creditors or
class of creditors, and/or of the stockholders or class of
stockholders of this corporation, as the case may be, agree to any
compromise or arrangement and to any reorganization of this
corporation as consequence of such compromise or arrangement, the
said compromise or arrangement and the said reorganization shall,
if sanctioned by the court to which the said application has been
made, be binding on all the creditors or class of creditors, and/or
on all the stockholders or class of stockholders, of this
corporation, as the case may be, and also on this corporation.
TENTH: The corporation reserves the right to amend, alter, change
or repeal any provision contained in this certificate of
incorporation in the manner now or hereafter prescribed by law, and
all rights and powers conferred herein on stockholders, directors
and officers are subject to this reserved power.
ELEVENTH: The name(s) and addresses of the incorporator(s) are as
follows:
Charles P. Revoile 1815 North Fort Myer Drive
Arlington, Virginia 22209
The powers of the incorporators shall terminate upon filing the
certificate of incorporation, and the name and address of each
person who is to serve as a director until the first annual meeting
of stockholders or until his or their successors are elected and
qualify, shall be as follows:
Joseph S. Annino 1815 North Fort Myer Drive
Arlington, Virginia 22209
J. H. Berkson 1815 North Fort Myer Drive
Arlington, Virginia 22209
Herbert W. Karr 1815 North Fort Myer Drive
Arlington, Virginia 22209
J. P. London 1815 North Fort Myer Drive
Arlington, Virginia 22209
Robert F. McIntosh 1815 North Fort Myer Drive
Arlington, Virginia 22209
Warren R. Phillips 1815 North Fort Myer Drive
Arlington, Virginia 22209
John DeNigris 1815 North Fort Myer Drive
Arlington, Virginia 22209
IN WITNESS WHEREOF, I have hereunto set my hand and seal, this 3rd
day of October, 1985.
/s/ (L.S.)
----------------------------
Charles P. Revoile
1/ Name changed from CACI Worldwide, Inc. to CACI, Inc. by
Amendment to the Certificate of Incorporation dated June 2, 1986;
and from CACI, Inc. to CACI International Inc by Amendment to the
Certificate of Incorporation dated December 23, 1986.
2/ Article FOURTH amended December 23, 1986.
3/ Article SEVENTH (6) and Article EIGHTH amended December 23,
1986.
Revised as of December 17, 1993
BY-LAWS
of
CACI International Inc
(A Delaware Corporation)
ARTICLE I. OFFICES
Section 1. PRINCIPAL OFFICE
The principal office for the transaction of business of the
Corporation is hereby fixed and located at 1100 North Glebe Road,
County of Arlington, Commonwealth of Virginia. The Board of
Directors is hereby granted full power and authority to change said
principal office from one location to another in said County.
Section 2. OTHER OFFICES
Branch of subordinate offices may at any time be established by the
Board of Directors at any place or places where the Corporation is
qualified to do business.
ARTICLE II. MEETING OF SHAREHOLDERS
Section 1. PLACE OF MEETINGS
All annual and other meetings of shareholders shall be held either
at the principal office of the Corporation or at any other place
which may be designated either by the Board of Directors pursuant
to authority hereafter granted to said Board, or by written consent
of all shareholders entitled to vote thereat, given either before
or after the meeting and filed with the Secretary of the
Corporation.
Section 2. ANNUAL MEETING
The annual meetings of the shareholders shall be held on the third
Friday of October of each year, at 9:00 o'clock a.m. or at such
other date and time, not inconsistent with Delaware law, as may be
approved by the Board of Directors; provided, however, should said
day fall upon a legal holiday, then such annual meeting of
shareholders shall be held at the same time and place on the next
day thereafter which is not a legal holiday.
Written notice of each annual meeting shall be given to each
shareholder entitled to vote thereat, either personally or by mail
or other means of written communication, charges prepaid, addressed
to such shareholder at his or her address appearing on the books of
the Corporation or given by him or her to the Corporation for the
purpose of notice. If a shareholder gives no address, notice shall
be deemed to have been given him or her if sent by mail or other
means of written communication addressed to the place where the
principal office of the Corporation is situated, or if published at
least once in some newspaper of general circulation in the county
in which said office is located. All such notices shall be sent to
such shareholder entitled thereto, not less than twenty (20) days
nor more than sixty (60) days before such annual meeting, and shall
specify the place, day, and hour of such meeting, and shall also
state the general nature of the business or proposal to be
considered or acted upon at such meeting before action may be taken
at such meeting on:
(a) A proposal to sell, lease, convey, exchange, transfer, or
otherwise dispose of all or substantially all of the property or
assets of the Corporation, except under Section 272 of the Delaware
General Corporation Law, and except for a transfer to a
wholly-owned subsidiary;
(b) A proposal to merge or consolidate with another
corporation, domestic or foreign;
(c) A proposal to reduce the stated capital of the Corporation;
(d) A proposal to amend the Articles of Incorporation;
(e) A proposal to wind up and dissolve the Corporation; and
(f) A proposal to adopt a plan of distribution of shares,
securities, or any consideration other than money in the process of
winding up.
Advance Notice of Stockholder Proposed Business at Annual Meeting:
At an Annual Meeting of the Shareholders, only such business
shall be conducted as shall have been properly brought before the
meeting:
(a) As specified in the notice of the meeting (or any
supplement thereto);
(b) By, or at the direction of, the Board of Directors; or
(c) Otherwise properly brought before the meeting by a
stockholder.
In addition to any other applicable requirements, for business to
be properly brought before an Annual Meeting by a stockholder, the
stockholder must have given timely notice thereof in writing to the
Secretary of the Corporation. To be timely, a stockholder's notice
must be delivered to or mailed and received at the offices of the
Secretary of the Corporation, not less than sixty (60) days prior
to the first anniversary of the date of the last Annual Meeting of
stockholders of the Corporation. A stockholder's notice to the
Secretary shall set forth as to each matter the stockholder
purposes to bring before the Annual Meeting (i) a brief description
of the business desired to be brought before the Annual Meeting and
reasons for conducting such business at the Annual Meeting; (ii)
the name and record address of the stockholder proposing such
business; (iii) the class and number of shares of the Corporation
which are beneficially owned by the stockholder; and (iv) any
material interest of the stockholder in such business.
Notwithstanding anything in the By-laws to the contrary, no
business shall be conducted at the Annual Meeting except in
accordance with the procedures set forth in this section, provided,
however, that nothing in this section shall be deemed to preclude
discussion by any stockholder of any business properly brought
before the Annual Meeting in accordance with said procedure.
The Chairman of the Annual Meeting shall, if the facts warrant,
determine and declare to the meeting that business was not properly
brought before the meeting in accordance with the provisions of
this section, and if he should so determine, he shall so declare to
the meeting that any such business not properly brought before the
meeting shall not be transacted.
Section 3. SPECIAL MEETINGS
Special Meetings of the shareholders, for any propose or purposes
whatsoever, may be called any time by the Chairman of the Board,
the President, or by the Board of Directors. Except in special
cases where other express provision is made by statute, notice of
such special meetings shall be given in the same manner as for
annual meetings of shareholders.
Notices of any special meeting shall specify, in addition to the
place, day and hour of such meeting, the general nature of the
business to be transacted.
Section 4. ADJOURNED MEETINGS AND NOTICE THEREOF
Any shareholders' meeting, annual or special, whether or not a
quorum is present, may be adjourned from time to time by vote of a
majority of the shares, the holders of which are either present in
person or by proxy, but in the absence of a quorum, no other
business may be transacted at such meeting.
When any shareholders' meeting, either annual or special, is
adjourned for thirty (30) days or more, notice of the adjourned
meeting shall be given as in the case of an original meeting. In
all other instances of adjournment, it shall not be necessary to
give any notice of an adjournment or of the business to be
transacted ad an adjourned meeting, other than by announcement at
the meeting at which such adjournment is taken.
Section 5. ENTRY OF NOTICE
Whenever any shareholder entitled to vote has been absent from any
meeting or shareholders, whether annual or special, an entry in the
minutes to the effect that notice has been duly given shall be
sufficient evidence that due notice of such meeting was given to
such shareholder, as required by the law and the By-laws of the
Corporation.
Section 6. VOTING
At all meetings of shareholders, every shareholder entitled to vote
shall have the right to vote in person or by proxy the number of
shares standing in his or her name on the stock records of the
Corporation. Such vote may be given viva voce or by ballot;
provided, however, that all elections for directors must be by
ballot upon demand made by a shareholder at any election and before
the voting begins.
Section 7. QUORUM.
The presence in person or by proxy of the holders of a majority of
the shares entitled to vote at any meeting shall constitute a
quorum for the transaction of business. The shareholders present at
a duly called or held meeting at which a quorum is present may
continue to do business until adjournment, notwithstanding the
withdrawal of enough shareholders to leave less than a quorum. When
a quorum is present at any meeting, a majority in interest of the
stock represented thereat shall decide any question brought before
such meeting, unless the question is one upon which by express
provision of law, the Articles of Incorporation, or these By-laws,
a larger or different vote is required, in which case such express
provision shall govern and control the decision of such question.
Section 8. CONSENT OF ABSENTEES
The proceedings and transactions of any meeting of shareholders,
either annual or special, however called and noticed, shall be as
valid as though had at a meeting duly held after regular call and
notice, if a quorum be present either in person or by proxy, and
if, either before or after the meeting, each of the shareholders
entitled to vote, not present in person or by proxy, sign a written
waiver of notice, a consent to the holding of such meeting, or an
approval of the minutes thereof. All such waivers, consents, or
approvals shall be filed with the corporate records or made apart
of the minutes of the meeting.
Section 9. ACTION WITHOUT MEETING
Any action, which under the provisions of Section 228 of the
Delaware General Corporation Law may be taken at a meeting of the
shareholders, may be taken without a meeting if authorized by a
writing signed by the holders of outstanding shares having not less
than the minimum number of votes that would be necessary to
authorize or take such action at any meeting at which all shares
entitled to vote thereon were present and voted, and filed with the
Secretary of the Corporation.
Section 10. PROXIES
Every person entitled to vote or execute consents shall have the
right to do so either in person or by an agent or agents authorized
by a written proxy executed by such person or his or her duly
authorized agent and filed with the Secretary of the Corporation;
provided, that no such proxy shall be valid after the expiration of
eleven (11) months from the date of its execution, unless the
shareholder executing it specifies therein the length of time for
which such proxy is to continue in force, which in no case shall
exceed seven (7) years from the date of its execution.
ARTICLE III. DIRECTORS
Section 1. POWERS
Subject to limitations of the Articles of Incorporation, of the
By-laws, and particularly Article II, Section 6 of these By-laws,
and Section 141 of the Delaware General Corporation Law as to
action to be authorized or approved by the shareholders, and
subject to the duties of directors as prescribed by the By-laws,
all corporate power shall be exercised by or under the authority
of, and the business and affairs of the Corporation shall be
controlled by, the Board of Directors. Without prejudice to such
general powers, but subject to the same limitations, it is hereby
expressly declared that the directors shall have the following
powers, to-wit:
First: To select and remove all other officers, agent, and
employees of the Corporation, prescribe such powers and duties for
them as may not be inconsistent with law, the Articles of
Incorporation or by By-laws, fix their compensation, and require
from them security for faithful service.
Second: To conduct, manage, and control the affairs and business
of the Corporation, and to make such rules and regulations
therefore not inconsistent with law, the Articles of Incorporation
or the By-laws, as they may deem best.
Third: To change the principal office for the transaction of the
business of the Corporation from one location to another within the
same county as provided in Article I, Section 1 hereof; to fix and
locate from time to time, one or more branch or subsidiary offices
of the Corporation within or without the State of Delaware as
provided in Article I, Section 2 hereof; to designate any place
within or without the State of Delaware for the holding of any
shareholders' meetings; and to adopt, make, and use a corporate
seal, and to prescribe the form of certificates of stock, and to
alter the form of such seal and of such stock certificates from
time to time, as in their judgment they may deem best; provided,
such seal and such certificates shall at all times comply with the
provisions of the law.
Fourth: To authorize the issuance of stock of the Corporation
from time to time, upon such terms as may be lawful, in
consideration of money paid, labor done, or services actually
rendered, debts or securities canceled, or tangible or intangible
property actually received, or in case of shares issued as a
dividend, against amounts transferred from surplus to stated
capital.
Fifth: To borrow money and incur indebtedness for the purposes of
the Corporation and to cause to be executed and delivered
therefore, in the corporate name, promissory notes, bonds,
debentures, deeds of trust, mortgages, pledges, hypothecations, or
other evidence of debt and securities therefore.
Sixth: To appoint an executive committee and other committees,
and to delegate to the executive committee any of the powers and
authority of the Board in the management of the business and
affairs of the Corporation, except the power to declare dividends
and to adopt, amend, or repeal By-laws. The executive committee
shall be composed of two or more directors.
Seventh: To impose such restriction(s) on the transfer of the
stock of the Corporation, specifically including by way of
illustration only, and not of limitation, e.g., the requirement
that such stock not be transferable on the books of the Corporation
except with a simultaneous transfer of the stock of any other
corporation(s), as is or may be permitted by law, and to remove any
such restriction(s) thereon.
Section 2. NUMBER AND QUALIFICATIONS OF DIRECTORS
The authorized number of directors of the Corporation shall be
a number between five (5) and nine (9) inclusive, as the Board of
Directors from time to time by vote of a supermajority (a majority
plus one) may set, until changed by amendment of the Articles of
Incorporation or by a by-law amending this Section 2, Article III
of these By-laws duly adopted by the vote or written assents of the
shareholders entitled to exercise fifty-one percent (51%) of the
voting power of the Corporation.
Section 3. ELECTION AND TERM OF OFFICE
The directors shall be elected at each annual meeting of the
shareholders, but if any such annual meeting is not held, or the
directors are not elected thereat, the directors may be elected at
any special meeting of the shareholders held for that purpose. All
directors shall hold office at the pleasure of the shareholders or
until their respective successors are elected. The shareholders may
at any time, either at a regular or special meeting, remove any
director and elect his or her successor.
NOMINATIONS OF DIRECTORS
Only persons who are nominated in accordance with the following
procedures shall be eligible for election as directors. Nominations
of candidates for election as directors of the Corporation at any
meeting of shareholders may be made (a) by, or at the direction of,
a majority of the Board of Directors, or (b) by any shareholder of
that class of stock entitled to vote for the election of directors
of that class of stock. Only persons nominated in accordance with
the procedures set forth in this section shall be eligible for
election as directors. Such nomination, other than those made by,
or at the direction of the board, shall be made pursuant to timely
notice in writing to the Secretary of the Corporation. To be
timely, a stockholder's notice shall be delivered to or mailed and
received at the office of the Secretary of the Corporation not less
than sixty (60) days prior to the first anniversary of the date of
the last meeting of stockholders of the Corporation called for the
election of directors. Such stockholder's notice to the Secretary
shall set forth (a) as to each person whom the stockholder proposes
to nominate for election or reelection as a director: (i) the name,
age, business address, and residence address of the person; (ii)
the principal occupation of the employment of the person; (iii) the
class and number of shares of capital stock of the Corporation
which are beneficially owned by the
person; and (iv) any other information related to the person that
is required to be disclosed in solicitations for proxies for
elections of directors pursuant to Rule 14a under the Securities
Exchange Act of 1934, as amended; and (b) as to the stockholder
giving the notice: (i) the name and record address of the
stockholder, and (ii) the class and number of shares of capital
stock of the Corporation which are beneficially owned by the
stockholder. The Corporation may require any proposed nominee to
furnish such other information as may reasonably be required by the
Corporation to determine the eligibility of such proposed nominee
to serve as director of the Corporation. No person shall be
eligible for election as a director of the Corporation unless
nominated in accordance with the procedures set forth herein.
The Chairman of the meeting shall, if the facts warrant, determine
and declare to the meeting that a nomination was not made in
accordance with the foregoing procedure, and if he should so
determine, he shall so declare to the meeting that the defective
nomination shall be disregarded.
Section 4. VACANCIES
Vacancies in the Board of Directors may be filled by the remaining
directors, though less than a quorum, or by a sole remaining
director, and each director so elected shall hold office until his
or her successor is elected at an annual or special meeting of the
shareholders.
A vacancy or vacancies in the Board of Directors shall be deemed to
exist in case of the death, resignation, or removal of any
director, or if the authorized number of directors be increased, or
if the shareholders fail at any annual or special meeting of the
shareholders at which any director or directors are elected, to
elect the full authorized number of directors to be voted for at
that meeting.
The shareholders may elect a director of directors at any time to
fill any vacancy or vacancies of a director tendered to take effect
at a future time; the Board or the shareholders shall have the
power to elect a successor to take office when the resignation is
to become effective.
No reduction of the authorized number of directors shall have the
effect of removing any director prior to the expiration of his or
her term of office.
Section 5. PLACE OF MEETING
Regular meetings of the Board of Directors shall be held at any
place within or without the State of Delaware which has been
designated from time to time by resolution of the Board or by
written consent of all members of the Board. In the absence of such
designation, regular meetings shall be held at the principal office
of the Corporation. Special meetings of the Board may be held
either at a place so designated or at the principal office.
Section 6. ORGANIZATION MEETING
Immediately following each annual meeting of shareholders, the
Board of Directors shall hold a regular meeting for the purpose of
organization, election of officers, and the transaction of other
business. Notice of such meetings is hereby dispensed with.
Section 7. OTHER REGULAR MEETINGS
Other regular meetings of the Board of Directors shall be held on
the third Friday of January, April, and July of each year at 9:00
o'clock a.m. thereof; provided, however, that should said day fall
upon a legal holiday, then said meeting shall be held at the same
time and place on the next day thereafter which is not a legal
holiday. Notice of regular meetings of the Board of Directors is
required and shall be given in the same manner as notice of special
meetings of the Board of Directors.
Section 8. SPECIAL MEETINGS
Special meetings of the board of Directors for any purpose or
purposes may be called at any time by the President, by the
Executive Committee, or by any three (3) members of the Board.
Written notice of the time and place of special meetings shall be
delivered personally to the directors or sent to each director by
mail or other form or written communication, charges prepaid,
addressed to him or her at his or her address as it is shown upon
the records of the Corporation, or if it is not shown on such
records or is not readily ascertainable, at the place in which the
meetings of the directors are regularly held. In case such notice
is mailed or telegraphed, it shall be deposited in the U.S. Mail or
delivered to the telegraph company in the place in which the
principal office of the Corporation is located at least one hundred
twenty (120) hours prior to the time of holding of the meeting. In
case such notice is delivered personally as above provided, it
shall be so delivered at least forty eight (48) hours prior to the
time of the holding of the meeting. Such mailing, telegraphing, or
delivery as above provided, shall be due, timely, legal and
personal notice to such director.
NOTICE FOR A PARTICULAR SPECIFIED ACTION
Notwithstanding the above requirements for regular or special
meetings, the Chairman of the Board, the Chief Executive Officer,
or any two directors may require at least thirty (30) calendar days
notice of any action, by writing delivered to the Secretary of the
Corporation, before or during any regular or special meeting, and
if such notice is given, no vote or written consent may be taken
upon such action until the passage of such time (at another special
meeting or by written consent). Provided, however, if eighty
percent (80%) of the directors agree to waive such notice, the
meeting or vote of consent on such action shall proceed without the
requirement for extended notice.
Section 9. NOTICE OF ADJOURNMENT
Notice of the time and place of holding an adjourned meeting need
not be given to absent directors if the time and place be fixed at
the meeting adjourned.
Section 10. ENTRY OF NOTICE
Whenever any director has been absent from any special meeting of
the Board of Directors, any entry in the minutes as to the effect
that notice has been duly given shall be sufficient evidence that
due notice of such special meeting was given to such director, as
required by law and the By-laws of the Corporation.
Section 11. WAIVER OF NOTICE
The transactions of any meeting of the Board of Directors, however
called and noticed or wherever held, shall be as valid as though
had at a meeting duly held after regular call and notice, if a
quorum be present, and if either before or after the meeting, each
of the directors not present, signs a written waiver of notice or
a consent to holding such meeting or an approval of the minutes
thereof. All such waivers, consents, or approvals shall be filed
with the corporate records or made a part of the minutes of the
meeting.
Section 12. QUORUM
A majority of the authorized number of directors shall be necessary
to constitute a quorum for the transaction of business, except to
adjourn as hereinafter provided. With the exception of Section 4 of
this Article, an action of the directors shall be regarded as the
act of the Board of Directors only if a majority of the entire
authorized number of directors shall vote affirmatively on such
action.
Section 13. ADJOURNMENT
A quorum of the directors may adjourn any directors' meeting to
meet again at a stated time, place, and hour; provided, however,
that in the absence of a quorum, the directors present at any
directors' meeting, either regular or special, may adjourn from
time to time, until the time fixed for the next regular meeting of
the Board.
Section 14. ACTION WITHOUT MEETING
Any action required or permitted to be taken by the Board of
Directors under any provision of law or these By-laws may be taken
without a meeting if all members shall individually or collectively
consent in writing to such action. Such written consent or consents
shall be filed with the minutes of the proceedings of the Board.
Such action by written consent shall have the same force and effect
as a unanimous vote of such directors, any certificate or other
document filed under any provisions of the Delaware General
Corporation Law which related to action so taken shall state that
the action was taken by unanimous written consent of the Board of
Directors without a meeting and that the By-laws authorize the
directors to so act, and such statement shall be prima facie
evidence of such authority.
Section 15. FEES AND COMPENSATION
Directors shall not receive any stated salary for their services as
directors, but, by resolution of the Board of Directors, a fixed
fee, with or without expenses of attending, may be allowed for
attendance at each meeting. Nothing herein contained shall be
construed to preclude any director from serving the Corporation in
any other capacity as an officer, agent, employee, or otherwise,
and receiving compensation therefore.
ARTICLE IV. OFFICERS
Section 1. OFFICERS
The officers of the Corporation shall be:
1. Chairman of the Board
2. President
3. Vice President
4. Secretary
5. Treasurer
The Corporation may also have, at the discretion of the Board of
Directors, one or more additional vice presidents, one or more
assistant secretaries, one or more assistant treasurers, and such
other officers as may be appointed in accordance with the
provisions of Section 3 of this Article. Officers other than the
President and Chairman of the Board of Directors need not be
directors. One person may hold two or more offices, except those of
President and Secretary.
Section 2. ELECTIONS
The officers of the Corporation, except such officers as may be
appointed in accordance with the provisions of Sections 3 or 5 of
this Article, shall be chosen annually by the Board of Directors,
and each shall hold his or her office at the pleasure of the Board
of Directors, who may, either at a regular or special meeting,
remove any such officers and appoint his or her successor.
Section 3. SUBORDINATE OFFICERS, ETC
The Board of Directors may appoint such other officers as the
business of the Corporation may require, each of whom shall hold
office for such period, have such authority, and perform such
duties as are provided in the By-laws or as the Board of Directors
may from time to time determine.
Section 4. REMOVAL AND RESIGNATION
Any officer may be removed, either with or without cause, by a
majority of the directors at the time in office, at a regular or
special meeting of the Board, or, except in the case of an officer
chosen by the Board of Directors, by any officer upon whom such
power of removal may be conferred by the Board of Directors.
Any officer may resign at any time by giving written notice to the
Board of Directors or to the President, or to the Secretary of the
Corporation. Any such resignation shall take effect at the date of
the receipt of such notice or at any later time specified therein;
and unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 5. VACANCIES
A vacancy in any office because of death, resignation, removal,
disqualification, or any other cause shall be filled in the manner
prescribed in the By-laws for regular appointments to such office.
Section 6. CHAIRMAN OF THE BOARD
The Chairman of the Board, if there shall be such an officer,
shall, if present, preside at all meetings of the Board of
Directors, and exercise and perform such other powers and duties as
may be from time to time assigned to him or her by the Board of
Directors as prescribed by the By-laws.
Section 7. PRESIDENT
Subject to such supervisory powers, if any, as may be given by the
Board of Directors to the Chairman of the Board, if there be such
an officer, the President shall be the Chief Executive Officer of
the Corporation and shall, subject to the control of the Board of
Directors, have general supervision, direction, and control of the
business and affairs of the Corporation. He shall preside at all
meetings of the shareholders, and in the absence of the Chairman of
the Board, or if there be none, at all meetings of the Board of
Directors. He shall be ex-officio a member of all the standing
committees, including the Executive Committee, if any, and shall
have the general powers and duties of management usually vested in
the office of president of a Corporation, and shall have such other
powers and duties as may be prescribed by the Board of Directors or
by the By-laws.
Section 8. VICE PRESIDENT
In the absence or disability of the President, the Chairman of the
Board or in the event of his absence or disability, the Vice
Presidents in order of their rank as fixed by the Board of
Directors, or if not ranked, the Vice President designated by the
Board of Directors, shall perform all the duties of the President,
and when so acting shall have all the powers of, and be subject to
all restrictions upon, the President. Absence and disability are
defined as follows: absence is physical absence from the
Corporation's principal place of business and unreachable by
telephone for a period of forty-eight (48) hours. Disability is the
inability of the President to perform his duties on an ongoing
basis.
The Senior Vice President and each other Vice President shall have
such other powers and perform such duties as are authorized by the
laws of Delaware and as are delegated to them respectively from
time to time by the board of Directors or the By-laws.
Section 9. SECRETARY
The Secretary shall keep, or cause to be kept, a book of minutes at
the principal office or such other place as the Board of Directors
may order, of all meetings of directors and shareholders, with the
time and place of holding, whether regular or special, and if
special, how authorized, the notice thereof given, the names of
those directors and shareholders present, the names of those
present at the directors' meeting, the number of shares present or
represented at shareholders' meetings, and the proceedings thereof.
The Secretary shall keep or cause to be kept, at the principal
office or at the office of the Corporation's transfer agent, a
share register or a duplicate share register showing the names of
the shareholders and their addresses; the number and classes of
shares held by each; the number and the date of certificates issued
for the same; and the number and date of cancellation of every
certificate surrendered for cancellation.
The Secretary shall give or cause to be given, notice of all
meetings of shareholders and the Board of Directors, as required by
the By-laws or by law to be given, and he or she shall keep the
seal of the Corporation in safe custody, and shall have such other
powers and perform such other duties as may be prescribed by the
Board of Directors or the By-laws.
Section 10. TREASURER
The Treasurer shall keep and maintain, or cause to be kept and
maintained, adequate and correct accounts of the properties and
business transactions of the Corporation, including accounts of its
assets, liabilities, receipts, disbursements, gains, losses,
capital surplus, and surplus shares. Any surplus, including earned
surplus, paid-in surplus, and surplus arising from a reduction of
stated capital, shall be classified according to source and shown
in a separate account. The books of account shall at all times be
open for inspection by any director.
The Treasurer shall deposit all monies and other valuables in the
name and to the credit of the Corporation with such depositories as
may be designated by the Board of Directors. He or she shall
disburse the funds of the Corporation as may be ordered by the
Board of Directors and shall render to the President and directors,
when they request it, an account of all of his or her transactions
as Treasurer and of the financial condition of the Corporation, and
shall have such other powers and perform such other duties as may
be prescribed by the Board of Directors or the By-laws.
ARTICLE V. MISCELLANEOUS
Section 1. RECORD DATE AND CLOSING STOCK BOOKS
A. Fixed Date
The Board of Directors may fix a time, in the future, not less than
twenty (20) nor more than sixty (60) days preceding the date of any
meeting of shareholders, and not more than sixty (60) days
preceding the date fixed for the payment of any dividend or
distribution, or for the allotment of rights, or when any change,
conversion, or exchange of shares shall go into effect, as a record
date for the determination of the shareholders entitled to notice
of and to vote at any such meeting, or entitled to receive any such
dividend or distribution, or any such allotment of rights, or to
exercise the rights in respect to any such change, conversion, or
exchange of shares, and in such case only shareholders of record on
the date so fixed shall be entitled to notice of and to vote at
such meeting, or to receive such rights, as the case may be,
notwithstanding any transfer of any shares on the books of the
Corporation after any record date fixed as aforesaid. The Board of
Directors may close the books of the Corporation against transfer
of shares during the whole, or any part of any such period.
B. No Fixed Date
As an alternative to an action taken under Subsection A of this
Section 1 of Article V, if no record date has been or is fixed for
the purpose of determining shareholders entitled to receive payment
of any dividend, the record date for such purpose shall be at the
close of business of the date on which the Board of Directors
adopts the resolution relating thereto.
Section 2. INSPECTION OF CORPORATE RECORDS
The share register or duplicate share register, the books of
account, and minutes of proceedings of the shareholders and
directors shall be open to inspection upon the written demand of
any shareholder or the holder of a voting trust certificate, at any
reasonable time, and for a purpose reasonably related to his or her
interests as a shareholder, and shall be exhibited at any time when
required by the demand of ten percent (10%) of the shares
represented at any shareholders' meeting. Such inspection may be
made in person or by an agent or attorney, and shall include the
right to make extracts. Demand of inspection other than at a
shareholders' meeting shall be made in writing upon the President,
Secretary, or Assistant Secretary of the Corporation.
Section 3. CHECKS, DRAFTS, ETC.
All checks, drafts, or other orders for payment of money, notes, or
other evidence of indebtedness issued in the name of or payable to
the Corporation, shall be signed or endorsed by such person or
persons and in such manner as, from time to time, shall be
determined by resolution of the Board of Directors.
Section 4. CONTRACTS, ETC.: HOW EXECUTED
The Board of Directors, except as the By-laws or Articles of
Incorporation otherwise provide, may authorize any officer or
officers, agent or agents, to enter into any contract or execute
any instrument in the name of and on behalf of the Corporation, and
such authority may be general or confined to specific instances;
and unless so authorized by the Board of Directors, no officer,
agent, or employee shall have any power or authority to bind the
Corporation by any contract or agreement or to pledge its credit to
render it liable for any purpose or to any amount.
Section 5. ANNUAL REPORTS
The Board of Directors shall cause an annual report or statement to
be sent to the shareholders of this Corporation not later than one
hundred and twenty (120) days after the close of the fiscal or
calendar year.
Section 6. CERTIFICATES OF STOCK
A certificate or certificates for shares of the capital stock of
the Corporation shall be issued to each shareholder when any such
shares are fully paid up. All such certificates shall be signed by
the President or a Vice President and the Secretary or an Assistant
Secretary. Such certificates may be paired with, deemed to
represent, and subjected to restrictions on transfer without
simultaneous transfer of, certificates for: (a) shares of stock of
any other corporation(s), (b) beneficial interests in such shares,
(c) interests in voting trust(s), or (d) other kinds of interests
in any other kind of entity.
Certificates for shares may be issued prior to full payment
thereof, under such restrictions and for such purposes as the Board
of Directors or the By-laws may provide; provided, however, that
any such certificate so issued prior to full payment shall state
the amount remaining unpaid and the terms of payment thereof.
Section 7. REPRESENTATION OF SHARES OF OTHER CORPORATIONS
The President or any Vice President and the Secretary or Assistant
Secretary of this Corporation are authorized to vote, represent,
and exercise on behalf of this Corporation all rights incident to
any and all shares of any other corporation or corporations
standing in the name of this Corporation. The authority herein
granted to said officers to vote or represent on behalf of this
Corporation any and all shares held by this Corporation or
corporations, may be exercised either by such officers in person or
by any person authorized to do so by proxy or power of attorney.
Section 8. INSPECTION OF BY-LAWS
The Corporation shall keep in its principal office for the
transaction of business the original or a copy of the By-laws as
amended or otherwise altered to date, certified by the Secretary,
which shall be open to inspection by the shareholders at all
reasonable times during business hours.
Section 9. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Every person who was or is a party or is threatened to be made a
party to or is involved in any action, suit, or proceeding, whether
civil, criminal, administrative, or investigative, by reason of the
fact that he or a person of whom he is the legal representative is
or was a director or officer of the Corporation or is or was
serving at the request of the Corporation as a director or officer
of another corporation, shall be indemnified and held harmless to
the fullest extent legally permissible under the General
Corporation Law of the state of Delaware from time to time against
all expense, liability, and loss (including attorneys' fees,
judgments, fines, and, if approved by the Board of Directors,
amounts paid or to be paid in settlement) reasonably incurred or
suffered by him in connection therewith.
If authorized by the Board of Directors, expenses incurred in
connection with the defense of any civil or criminal action, suit,
or proceeding may be paid by the Corporation in advance of the
disposition of the action, suit, or proceeding, upon receipt of an
undertaking by or on behalf of the director or officer to repay
such amounts if it shall be ultimately determined that he is not
entitled to be indemnified by the Corporation.
The foregoing right of indemnification shall be in addition to, and
not exclusive of, all other rights to which such director or
officer may be entitled. Payments pursuant to the Corporation's
indemnification of any person hereunder shall be reduced by any
amounts such person may collect as indemnification under any policy
of insurance purchased and maintained on his behalf by this or any
other Corporation.
ARTICLE VI. AMENDMENTS
Section 1. POWER OF SHAREHOLDERS
New By-laws may be adopted or these By-laws may be amended or
repealed by the vote of shareholders entitled to exercise fifty-one
percent (51%) of the voting power of the Corporation or by the
written assent of such shareholders.
Section 2. POWERS OF DIRECTORS
Subject to the right of shareholders as provided in Section 1 of
this Article VI to adopt, amend, or repeal By-laws, By-laws other
than a By-law or amendment thereof changing the authorized number
of directors may be adopted, amended, or repealed by the Board of
Directors.
ARTICLE VII. SEAL
The Corporation shall have a common seal, and shall have inscribed
thereon the name of the Corporation, the year of its incorporation,
and the word Delaware.
